First, it might be helpful to understand the difference between a Financial Planner and a Financial Coach. Let’s start with Financial Planners. You may not be surprised to learn that there are a LOT of names for a Financial Planner, including but not limited to Private Wealth Manager, Financial Advisor, Certified Financial Planner, Financial Life Planner, Financial Professional, and Financial Representative. Generally speaking, a Financial Planner focuses on retirement planning and financial products. A Financial Planner has to pass the relevant exams to give financial advice and help you implement financial products, so they will have passed a FINRA Series 6 or 7 exam, regulatory exams, product-specific exams for insurance and annuities, and so forth.
There are also a lot of different names for a Financial Coach, such as Debt Coach, Money Coach, Financial Counselor, and Financial Fitness Coach. A Financial Coach focuses on the basics of personal money management, like budgeting, debt, setting goals, changing behavior, and holding you accountable. They educate you about financial fundamentals and many can help you work on your relationship with money. They aren’t licensed to sell financial products and don’t focus there, anyway. Note that anyone can hang out a shingle as a Financial Coach without one iota of training or certification. But that doesn’t mean you shouldn’t have a coach; on the contrary, it’s a fantastic idea for just about anyone. Just make sure you find yourself an Accredited Financial Counselor or Accredited Financial Fitness Coach. These folks will have gone through a certification program.
Sometimes a Financial Planner will incorporate coaching principles into their practice, and some will even be certified coaches themselves. There is no clear, hard line between the two professions, except that Coaches are not licensed to sell financial products. If you need a Planner, a Coach, or a Combo, you can find someone to meet your needs!
1. Educate you about financial basics and how to make good decisions.
2. Explore how you think about money and how that plays out in your life.
3. Help you reflect on your relationship with money and change beliefs that don’t serve you.
4. Identify behaviors that aren’t working for you and help you build good habits.
5. Provide emotional support and encouragement as you work on your financial life.
6. Work with you to create a spending plan and stick to it.
7. Help you create a plan to get out of debt.
8. Give you ideas for earning more money.
9. Help you set financial goals like saving more, paying down debt, improving your credit score, buying a house, etc.
10. Hold you accountable for reaching the goals you set.
Why would someone go to a Financial Coach rather than a Financial Planner?
1. To understand their beliefs about money and how these beliefs impact their financial life.
2. To learn new ways of thinking about and working with money that might serve them better.
3. To improve how they work with their significant other on money.
4. To change beliefs and behaviors that aren’t working.
5. To get educated about personal finance.
6. To learn how to set and reach financial goals.
7. To get access to tools and best practices for managing money.
8. To have an accountability partner and cheerleader in their financial life.
9. To feel more confident and satisfied with their relationship with money.
Coaching can be really helpful for someone who doesn’t have a lot of assets or who has negative cash flow. These people might not have a lot of extra money to pay for full financial planning, and/or they might not have much to plan with. Coaching can get them started down the road of positive cash flow and good habits, and then financial planning could be the next step. For people who are just starting out in the world of personal finance, Coaching is a great first step.
But also keep in mind that Coaching can benefit people who have lots of assets and a comprehensive financial plan. Just because you have some money and a clear plan doesn’t mean your financial life is working for you. What about those old feelings of lack and the need to hoard money or spend it as fast as you get it? What about the incessant fights with your SO about spending? What about that lack of knowledge of basic financial concepts? Get thee to a Coach, Lovey.
Sold on the idea? The Association for Financial Coaching and Planning Education (AFCPE) has a search tool to help you find a Financial Coach. I wish you all the best as you grow in this area and I’d love to hear from you about it. Post below to let me know how it goes!