Financial Coach, Advisor, or Planner, which one is the best for you?

There are many different financial professionals that will want to work with you and your money. But deciding which professional is the best one to work with can be overwhelming. Here is a breakdown comparing a financial coach and financial advisor and financial planner. 

Why work with a financial professional?

While 75% of Americans manage their finances, less than half would be able to cover an emergency expense greater than $1000.  Working with the right financial professional can help you make a plan to pay off debt, be prepared for a financial emergency, plan for retirement, and invest to meet your goals.

The first step is deciding that you are ready to work with someone to help you with your money.  The next step is deciding who to work with. Use this guide to help you decide on which financial professional is the right fit for you on your journey.

What is a financial coach?

A financial coach is someone who works with you one-on-one to define your financial goals, money mindset, and limiting beliefs that may be holding you back. Their objective is to teach you about your money. Financial coaches (also known as money coaches) help you feel empowered with your money.

Money coaches will establish a money foundation with you, help you develop good money habits, and assist you with your money mindset and financial goal setting.

A financial coach will help teach you the skills to be successful with your money but it will be up to you to apply these skills.

When would you need a financial coach?

A financial coach may be the perfect fit for you if you are:

  • Just starting on your financial journey or want to learn more about your money and what to do with it
  • Earning income but are not sure what to do with it to get ahead
  • Feeling stuck financially
  • Tired of trying to budget and not seeing any improvement
  • Looking for accountability with your money
  • Having trouble setting financial goals

Pros of working with a financial coach

One of the major benefits of working with a financial coach is the one-on-one personalized attention you will get. Your financial coach will help keep you accountable for your money goals along your money journey.

Financial coaches do not apply cookie-cutter plans.  They will sit down with you and figure out what you need on your financial journey for where you are. 

Much of the struggle is not lack of financial strategy instead it’s mindset. A financial coach will help you look at your finances through different lenses. You can have a great financial plan but if you don’t focus on changing your thoughts and feelings around money it will be hard to stick to. A money coach will help you with that.

A good financial coach will be hands-on and approachable. They will build a relationship with you and work with you for as long as you need to achieve your financial goals.

Cons of working with a financial coach

Currently, there are no licensing requirements to be a financial coach. But don’t discredit someone because they do not have a bunch of letters behind their name, experience can be the best teacher at times.

Before agreeing to work with a particular financial coach, make sure you do some research into the person you will be working with. What are their former clients saying about working with them? Don’t be afraid to ask any financial coach you are considering what goals they have and how they plan to achieve them.

Financial coaches cannot and will not be offering financial or insurance products. Because of the lack of licensing and governing body oversight required to be a financial coach, financial coaches cannot provide you with specific investment advice. They are unable to advise you on what stocks to buy or how to manage your investment portfolio. But they can share educational resources and translate hard to understand financial jargon.

Women financial professionals

What is a financial advisor?

The main objective of a financial advisor is to provide you with investment advice and to manage your money. A financial advisor is a professional who can assist you in maintaining current assets and portfolios. They manage your assets, assist you in structuring your investment portfolio, and plan for retirement.

If you have worked with a financial coach in the past, a financial advisor can help build on what you have already learned about building wealth with a finanical coach. . They will provide advice on how to best invest to meet your financial goals. And can help manage your money to do so.

Financial advisors either work directly for a financial institution or independently.  Like a financial coach, you will want to do your research before agreeing to work with a financial advisor.

When would you need a financial advisor?

A financial advisor may be the perfect fit for you if you are:

  • Comfortable with the basics of personal finance
  • Needing assistance with estate planning
  • Looking to hand over the management of your investments to someone else
  • Wanting to invest but need specific advice or guidance
  • In favor of a hands-off approach to investing
  • In need of specific insurance and tax strategies
  • Wanting the next level of money management beyond working with a financial coach 

Pros of working with a financial advisor

Financial advisors are licensed and therefore can provide you specific investment advice on what to invest in and how to invest.  They are educated in building wealth and creating investment portfolios – something that can be confusing.

But a word of caution here – you will want to make sure your financial advisor has a fiduciary responsibility to you. This means that they provide advice based on your best interest and not what will provide them with the biggest commission.

Cons of working with a financial advisor

Your relationship with a financial advisor may feel more transactional or product-based as compared to working with a financial coach or a financial planner.  

They also may only work with clients with a certain size portfolio. 

So if you are just starting you have two options; work with a financial coach to help build your wealth to a portfolio size that is manageable for a financial advisor. Or look around for financial advisors who work with clients with smaller investment portfolios.

Depending on the financial advisor’s fee structure, the cost of working with a financial advisor can add up over time.

What is a financial planner?

A financial planner is a financial professional who will help you define your money goals and create a comprehensive plan to meet those goals. One key thing to note is that a financial planner is a type of financial advisor. They apply a holistic approach and look at your complete financial situation.

Financial planners create a plan for you that addresses many aspects of your financial journey including but not limited to cash flow management, retirement, investment, tax, and insurance planning.

When would you need a financial planner?

A financial planner may be the perfect fit for you if you are:

  • Looking for a plan to meet specific financial goals
  • Wanting to work with someone occasionally over a long period of time
  • In need of advice related to retirement, investment, tax or insurance planning
  • Desiring a plan to manage your money
  • Clear on what your financial goals are

Pros of working with a financial planner

Similar to financial advisors, financial planners are also licensed and regulated. This means that they have passed some form of licensing exam ensuring a base level of knowledge related to financial planning.

Another benefit of working with a financial planner is that they look at your complete financial picture and money journey.  

Similar to financial coaches, financial planners build relationships with their clients by working with them for long periods.

Cons of working with a financial planner

Some financial planners may only work with clients who have a certain portfolio size. Many financial planners that provide you ongoing service charge a percentage of the assets under their management.

If you are just starting, or don’t have a large investment portfolio you may find it more difficult to find a financial planner that will work with you.

If a financial planner is working directly with a financial institution, they may also be limited in the advice or planning that they can offer you.

Final thoughts on comparing a financial coach, financial advisor, and financial planner

What financial professional you decide to work with will depend on where you are in your money journey and what your goals are.  

If you are at the beginning of your journey and want to feel empowered with your money, work with a financial coach.

If you are looking for someone to take over the management of your investments and to provide investment advice, then a financial advisor is who you are looking for. 

And if you are looking for someone to create a holistic plan for your money journey then a financial planner may be the right fit for you.

Be sure to look for a financial advisor who has a fidiciuary duty to you. Don’t be afraid to ask about assest management fees, expense ratios and other ongoing service fees. It’s your money and be clear on what you are willing to paying for.

Regardless of the financial professional, you choose to work, make sure that the person is the right fit for you.  You will want to work with someone who has a personality and working style that you are comfortable with. 

And lastly, know that whoever you choose to work with today can change.  Your decision is not set in stone and can change throughout the evolution of your money journey.

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1 COMMENT

  1. Michelle A Hayden Marsan | 11th Jul 21

    Hi Walli, I would like to connect with you and hash out some retirement figures.

    Would you let me know your financial background?

    TY

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