Financial coach vs financial adviser: what's the difference? (2024)

FAQs

Is a financial advisor the same as a financial coach? ›

Financial advisors manage money for clients, often in the form of managed investment portfolios. Financial planners provide comprehensive money management services, including advice on saving, investing, and taxes. Financial coaches are money experts that provide reliable advice to help you manage your own finances.

If you have considerable wealth and require a long-term estate plan with multiple moving parts, such as preservation of capital, income generation, taxes, insurance and legal issues, a financial planner is likely the better choice.

The Securities and Exchange Commission offers a clear and binding definition of investment advisors: persons or firms that are “engaged in the business of; providing advice to others or issuing reports or analyses regarding securities.” So financial coaches do not recommend stocks or other investments.

A financial coach is a type of advisor who can help you reach your financial goals by teaching you money management skills, such as how to build savings, create a financial plan or pay down debt. A financial coach can help improve your financial literacy, but they likely cannot give you investment advice.

As a rule, the advisor is not expected to do any work. He offers his knowledge, some of his time and access to his network. Unlike a coach, who asks questions and listens a lot, the advisor asks few questions and talks a lot. A coach works with a client to unleash the client's potential and improve his performance.

Not only are financial coaches and planners different from each other, but there are several names that are used interchangeably for both. Financial coaches might call themselves money coaches, financial counselors, or even debt coaches.

Rates for financial coaches can vary, but hourly rates of $100 to $300 are fairly common. Annual packages with a financial coach may run into the thousands of dollars, so you'll want to have specific goals in mind when you start working with a coach so that the costs don't become a financial burden.

By working with a financial coach, individuals gain not only the knowledge and skills necessary to manage their money effectively but also the confidence and motivation to take control of their financial future.

They don't get caught in analysis paralysis and are good about making decisions for themselves. If you have a handle on your financial life, feel confident in navigating the material available to you, and enjoy doing it yourself, there is no point in hiring a financial advisor. You already have it well under control!

While it is not a requirement to have a financial coach certification, earning certifications can give you more knowledge and credibility and a competitive edge. Most clients have an easier time trusting someone with strong credentials in the field.

Can anyone call themselves a financial coach? ›

Financial coaches are not licensed and anyone can call themselves one, although some may have received professional training and certification. Coaching services are often available through local nonprofit organizations and some employers.

Help you uncover your financial goals. Work with you to make a plan (so you'll actually achieve them) Hold you accountable to your plan (with a budget that works) Help you change your money behaviors.

A financial planner is a professional who helps individuals and organizations create a strategy to meet long-term financial goals. "Financial advisor" is a broader category that can also include brokers, money managers, insurance agents, or bankers.

According to Salary.com, the average financial coach makes $74,470. However, Glassdoor estimates that the total pay for a financial coach is much higher, at $108,726 per year.

Financial consultants often work with clients on specific, time-limited issues and part ways once those issues are resolved. On the other hand, financial advisors tend to establish long-term relationships, managing their clients' finances in the present while helping them plan for the future.

Coaching is differentiated from counseling in that coaches are not “experts,” but instead they provide encouragement and monitoring over advice and do so in a process largely driven by the client.