Financial Coach vs. Financial Advisor, What’s the difference?

“What’s the difference between a Financial Advisor and a Financial Coach?”

 

I have been asked this question many many times, it’s time for me to write a post to hopefully answer for everyone!

AdobeStock 94558643 scaled - Project M: Mind & Money

Most people are familiar with Financial Advisor, also known as Financial Planner or Investment Advisor. FAs are licensed and registered by FINRA and regulated by the Security Exchange Commissioner or by the state in which they operate.  With their training and experience,  FAs recommend investment strategies and help manage clients’ assets. They do so by utilizing various financial instruments such as stocks, bonds, mutual funds, insurance products, etc.

AdobeStock 39634478 lowres scaled - Project M: Mind & Money

 

Financial Coach, on the other hand, focuses on helping clients explore, understand, and re-build their relationship to money so that they can lead a satisfying financial life with a sense of peace. Sometimes also known as Money Coach or Personal Finance Coach, FCs cover a wide range of services, depending on the level of experiences and professional background of the individual coach. There isn’t a regulatory agency that oversees the coaching industry, although there are coaching companies that provide coaching training and they issue certifications upon completion.

Why is it important to work on your relationship to money?

Because money is in all parts of our lives and our day-to-day decisions are driven by our money psychology. Think about the last time you tried to decide whether to take job A vs job B or whether you should start a new business like you have always dreamed of? Was money part of that dilemma? Maybe a relative asked to borrow some money and you felt uncomfortable but didn’t quite know how to respond? Or every time you and your spouse discuss retirement it ends in despair because you want A and he wants B? How do you decide whether to keep your savings for your own retirement or to use it for your children’s college tuitions? The answers to these questions depend on your value of money, your view of others through your own money lenses and your view of yourself in relation to money.

So, Who Do You Call?

When you have a money related question, how do you know who to call? Here are some guidelines:

  1. If the question is “how can I make more money to support the lifestyle I want?”, then a Financial Coach can help your explore why you don’t feel like you are making enough? What’s blocking you? What is enough? What is your ideal lifestyle? How do we bridge that gap?
  2. If the question is “I’ve been making good money for most of my adult life, but I don’t have much to show for. I’m now worried about how I’m going to retire?”, then a Financial Coach can help explore your spending habits, your priorities in life, and a clear vision of your retirement.
  3. If the question is “I’ve been a stay-home mom for the last 10 years to take care of the kids and the family, now I’m in a divorce. How do I regain confidence and control over my financial life moving forward?”, then a Financial Coach, preferably someone who specializes in divorce situations, can work with you on building your confidence back while sorting through your finances. This may be done in conjunction with a Financial Advisor depending on the amount assets there are.
  4. If the question is “I have some assets but I don’t have the time and capacity to actively manage them myself. What should I do? Where should I invest my money?”, then a Financial Advisor can working with you by managing your assets and making investment recommendations based on your life goals.
  5. If the question is “I would like to plan for my retirement, I have X number of years left to work, how much should I put away each month?”, a Financial Advisor can help you with savings/investment strategies and asset allocations in order to meet your retirement goals.

A few other tips:

When selecting a Financial Coach/Money Coach, be sure to check on the specific experiences and background of the coach in the field of finances. If you only need help in bringing more abundance into your life, then a Money Coach who specializes in law of attraction or removing blocks may help you achieve that. But if you also need help in improving your budget or you wonder “even if I attract all the money I want, how do I effectively manage them so that I don’t lose them”, then you need a coach who also has a financial background. As I mentioned before, the field of financial coaching is not regulated so there is no minimum standards of credentials. The key is to find the right match between what you are looking for and what the coach can bring to the table.

When selecting a Financial Advisor, check both the advisor as well as the company he/she works for. Get a good understanding of the company’s investment philosophies and make sure that they are in line with your personal philosophy. Don’t be afraid to ask questions when they present something that you don’t understand. How they answer your questions can be a good indicator of your future working relationship.

Lastly, FC and FA don’t have to be mutually exclusive. There are many instances where it makes sense to work with both as they each address a different need.

If you are curious if Financial Coaching is right for you, click here to book a Complementary Discovery Session.

 

Share This

Yulin Lee

Yulin Lee

Yulin is a Money, Wealth & Financial Coach who helps women reduce stress and live a happier & easier life by having their finances under control. It’s her own journey to financial freedom that fuels her passion to bring more women onto the path of living a purposeful life without the money constraint.

You Might Also Like...

Woman in yoga posture outdoors in the forest.

3 Things to focus on to stay sane and calm

In the almost 3 weeks of Shelter-In-Place, we have gone from the initial shock to gradual acceptance. These are life changing moments, and it is important that we take the time to process. Now that we had the chance to take in and absorb what is happening in the world, I felt that it’s the…

Queen looking in the mirror seeing pawn in reflection

3 Ways To Help Move the Needle Toward Gender Equality in Finance

In light of the upcoming International Women’s Day on March 8, I’ve been thinking around the topic of gender inequality in finance. How far we’ve come as a society, and how much more work remain. When I started my financial coaching business, I intentionally decided to focus on women because I felt that systematically women…

Photo by JoelValve on Unsplash

I Hope You Dance….

October, it is the last quarter of 2019. As we dance our way into another year, what would you like more of in 2020? How about a little more of self-love? Don’t get me wrong, I’m not advocating moving up the selfishness scale. Instead, I’m talking about adding a pinch more of self compassion as…

Leave a Comment