Financial coach, counselor, advisor, planner… they sound like basically the same thing, right? In the financial world, however, each of these roles is vastly different from the others.
A financial coach is a person on your team who can help you establish financial goals, develop a personalized system for budgeting, make a game plan for getting out of debt, and show you how to save for future expenses.
As a financial coach, I go beyond looking at numbers and spreadsheets. I view your money as a tool to achieve the things in life that are important to you, from buying a home and saving for vacation to replacing the washing machine and giving to your favorite charities.
Coaching primarily focuses on what you are doing with your money, whereas an advisor or financial planner will look at how to maximize your investable assets. One way of looking at my role as your coach is I help you make sure you have the money to invest!
As a financial coach, we’ll keep the focus of our sessions on the present and the future. Counselors will help you explore and understand the past, and depending on your situation this can be very helpful. However, coaching is about dealing with the present and making a positive path forward.
A financial advisor has a license to sell financial products such as life insurance and mutual funds. They can be helpful in managing your wealth and making sure you have proper insurance policies in place.
A certified financial planner (CFP) is similar to an advisor, yet they have an advanced level of certification that gives them additional expertise in estate planning, especially where taxes are concerned.
Like an advisor, a CFP’s primary role is to assist you with long-term planning and wealth management; however, a financial coach is uniquely focused on helping you to take control of your money, implement a money-management system that is custom tailored to your goals and needs, and to help you build your net worth by teaching wise and practical ways to handle your finances.
A financial coach and an advisor or CFP can all be valuable members to have on your financial team, although your particular objectives at the moment will determine from whom you seek advice.
It’s important to feel comfortable with your coach, just like you would when hiring a personal trainer at the gym. After all, if you already have a hard enough time making yourself go to the gym to exercise, the last thing you want to do is hire a trainer you don’t look forward to working with!
That’s one of the reasons I always provide a complimentary consultation. I want my clients to feel at ease before they enter a coaching relationship. So when you’re considering hiring a coach, take the time to sit down together for a consultation. That way, you have the information and assurance you need to move forward with confidence.
Look for a coach who does not sell financial products so that you know the advice you are receiving is unbiased and objective. Many financial companies offer “coaching” yet their primary goal is to sell an expensive (and often subpar) product such as cash-value life insurance. In the long run, this is far costlier than investing in working with a trained financial coach who is dedicated solely to helping you achieve your financial goals.
Finally, remember that a coach is there to encourage you, provide you with information pertaining to your specific needs, and challenge you with doable action steps. Just as a personal trainer can guide you to getting in the best physical shape of your life, yet can’t get on the treadmill on your behalf, a financial coach can give you all the tools, knowledge, and accountability you need to succeed, but you are ultimately in charge of your money.
Permanently changing your financial future is a process. If you’re ready to begin the journey to financial wellness, a coach is the person on your team who will help you succeed.