Today, in “Financial Coach vs Financial Advisor”, we will compare the two primary professionals who offer financial advice.

When it comes to getting help with your money, you may wonder whether you need a financial coach or a financial advisor. While both professionals offer financial guidance, their approaches, expertise, and fee structures differ significantly.

Understanding the differences can help you make informed decisions—and choose the right financial professional for your unique needs.

In this article, “Financial Coach vs Financial Advisor,” you will learn:

• The difference between a financial coach and advisor
• How to choose a financial expert that will work best for you and your situation
• The credentials each typically holds
• How they charge for their services

What is a Money or Financial Coach?

A money coach is a personal trainer for your finances. They work to help you identify and achieve your financial goals and improve your bottom line.

Area of Specialty

They focus on the mindset and less complex areas, but also assist clients in:

• Mindset
• Goals
• Budgeting
• Debt management
• Behavior changes
• Day-to-day challenges in their financial life

Roles

Many financial coaches prioritize education and empowerment. They aim to equip clients with the knowledge and tools to make sound financial decisions. Money coaches often provide accountability and support, guiding clients through implementing financial strategies and behavioral changes.

What is a Financial Advisor?

A financial professional is also known as a wealth manager or investment advisor. They specialize in managing clients’ investments and helping them achieve their long-term financial objectives.

Area of Specialty

Financial advisors focus on a variety of technical areas.

Examples include:

• Financial planning
• Investment portfolio allocation and management
• Insurance planning
• Taxes, retirement, estate planning
• Wealth building

Role

Financial advisors typically want to help clients grow and protect their wealth. A financial advisor is a great option if managing your money is a priority.

They focus on the areas of:

• Investment strategies
• Asset allocation
• Risk management

They create investment plans by reviewing their clients’:

• Financial situation
• Risk tolerance
• Investment goals

Financial advisors also monitor and adjust their clients’ portfolios and align them with their objectives and the market conditions.

Credentials of a financial advisor

Financial advisors can hold various credentials, certifications, and licenses, demonstrating their expertise, qualifications, and ability to provide financial advice and services to clients. Here are some of the most common credentials and what they signify:

Certified Financial Planner (CFP®)

The Certified Financial Planner designation is one of the most recognized and respected credentials in the financial planning industry.

CFP® professionals:

• Complete extensive education
• Pass a comprehensive exam
• Accrue relevant work experience
• Adhere to a strict code of ethics and standards of conduct
• Have extensive training in all areas of financial planning

Areas of expertise include:

• Investment management
• Retirement planning
• Tax planning
• Estate planning
• Insurance planning

Chartered Financial Analyst (CFA®)

The CFA manages investments and analyzes finances.

CFAs have education, examination, and ethical standards requirements.

They focus on:

• Investment advice
• Portfolio management
• Ethical standards
• Financial advisory services

Chartered Financial Consultant (ChFC®)

The Chartered Financial Consultant has completed extensive coursework.

Topics include financial, retirement, estate, tax, and insurance planning.

Registered Investment Advisor (RIA)

RIAs are individuals or firms registered with the Securities and Exchange Commission (SEC) or state securities regulators.

They provide clients with investment advice and portfolio management services in exchange for a fee.

RIAs adhere to a fiduciary standard. They are required to act in their clients’ best interests.

Chartered Investment Counselor (CIC)

The CIC designation holds the CFA designation and works in a registered investment advisory firm.

CICs provide investment advice and manage client portfolios.

Series 7 and Series 66 Licenses

People who sell securities must hold licenses.

Examples include:

• Stocks
• Bonds
• Mutual funds

The Series 7 license permits individuals to sell a wide range of securities, whereas the Series 66 license allows individuals to provide investment advice and sell securities products within a specific state.

Certified Investment Management Analyst (CIMA®)

CIMAs specialize in investment management and portfolio construction. They have completed coursework covering asset allocation, risk management, manager selection, and performance measurement.

Personal Financial Specialist (PFS)

The PFSs are CPAs who have completed additional education and experience requirements in financial planning.

PFS professionals are qualified to provide financial planning advice, including tax, retirement, estate planning, and risk management.

It’s essential to ask and verify a financial advisor’s credentials before hiring them.

A sample of factors you should consider:

• Experience
• Expertise
• Fiduciary status

Credentials of a Financial Coach

Money coaching is a relatively newer field compared to financial advising.

The coaching industry has a certification program. However, they are not regulated.

Certified Financial Coach (CFC)

Some organizations offer certification programs specifically tailored to financial coaching.

These programs typically cover various aspects of money coaching.

Examples include:

• Communication skills
• Goal setting
• Budgeting
• Debt management
• Behavioral finance

A CFC designation demonstrates a commitment to professional development and competence in financial coaching principles.

Certified Professional Coach (CPC)

The CPC designation signifies completion of training and proficiency in general coaching. Coaches with a CPC designation have undergone rigorous training programs covering coaching fundamentals, ethics, and professional standards. While not focused solely on finance, a CPC credential can benefit those working in this field.

Financial Counseling Certification

Some organizations offer certifications in financial counseling or financial wellness coaching. These programs typically cover topics such as credit counseling, debt management, budgeting, and financial goal setting. While not exclusively focused on coaching, these certifications provide valuable knowledge and skills applicable to financial coaching practice.

Certified Money Coach (CMC)

The CMC has completed training in money coaching.

Money coaches help clients:

• Explore their attitudes and beliefs about money
• Identify financial goals
• Develop strategies to achieve them

While not as widespread as other certifications, the CMC designation indicates expertise in money psychology and behavior-based coaching.

Accredited Financial Counselor (AFC)

The Accredited Financial Counselor designation demonstrates expertise in providing financial education and guidance to individuals and families. AFC professionals undergo training in areas such as budgeting, saving, debt management, and credit counseling. While not specific to coaching, the AFC designation indicates proficiency in financial wellness principles.

International Coach Federation (ICF) Certification

The International Coach Federation is a globally recognized organization that offers certifications for professional coaches.

Obtaining an ICF credential, such as Associate Certified Coach (ACC) or Professional Certified Coach (PCC), demonstrates proficiency in coaching competencies, ethics, and professional standards. Coaches with ICF certification adhere to a strict code of ethics and ongoing professional development requirements.

When seeking a coach, it’s essential to inquire about their training, experience, and approach. While specific credentials can indicate a coach’s level of expertise and practical experience, client testimonials are valuable indicators of their effectiveness. Additionally, look for coaches who align with your goals, values, and communication style to ensure a productive coaching relationship.

Fee Structure

Comparing Fee Structures

Understanding how financial coaches and advisors charge fees is essential to making an informed decision.

Financial Coach vs Financial Advisor Fee Structures

The Financial Coach

Financial coaches typically charge clients an hourly rate for coaching sessions.

Fees range from $50 to $500 per hour, depending on the coach’s experience and credentials.

Examples include:

• Package deals
• Subscription-based service
• Flat a fixed monthly or quarterly fee
• No Product Commission

In addition, financial coaches do not earn commissions or fees from financial product sales.

The Financial Advisor

Most financial advisors typically charge clients an hourly fee or a fee based on the value of assets under management, known as AUM.

Some advisors are fee-only. They charge fees for their services and do not receive commissions. Fee percentages vary widely but generally range from 1% to 2% of AUM annually. For example, if a client has $500,000 invested with an advisor charging a 1% AUM fee, they will pay $5,000 per year.

In addition to AUM fees, advisors may charge hourly rates or flat fees for specific services.
Examples of services include:

• Financial planning consultations
• Retirement planning analyses
• Tax, estate, and insurance planning
• Commissions

Some advisors earn commissions from selling financial products, such as mutual funds, annuities, and insurance policies.

Earning a commission creates a potential conflict of interest. Any conflict should be disclosed.

Choosing the Right Professional for Your Needs

When deciding who you should hire, consider your financial goals, preferences, and the complexity of your financial situation.

Here are some factors to consider:

A Financial Coach may be suitable if you:

• Seek budgeting, debt management, and basic financial literacy guidance
• Prefer a hands-on approach to financial planning and are willing to take an active role in managing your finances
• Value unbiased advice and transparency in fee structures

A Financial Advisor may be suitable if you:

• Have substantial assets to invest and require expertise in portfolio management and investment strategies
• Are planning for complex financial goals like retirement, tax optimization, or estate planning
• Prefer to delegate investment decisions to a professional and prioritize comprehensive financial planning services

Conclusion – Financial Coach vs. Financial Advisor

Financial coaches and advisors play important roles in helping individuals achieve financial success.

They focus on holistic financial planning and behavioral changes.

On the other hand, financial advisors specialize in investment management and wealth accumulation.

Understanding the differences, credentials, and fee structures can help you make informed decisions about your financial future.

A coach may be a better option if you need more support with your mindset, behaviors, or budget.

However, a financial advisor may be a better choice if you need a financial plan or investment management.

Getting the financial support you need helps to ensure you secure your financial future and retirement.