Hiring a financial professional is one of the best ways to turn your financial situation around and reach all of your biggest money goals. But many people tell me that they’ve procrastinated hiring someone because they aren’t sure what type of professional to work with.
They’ve been DIYing their finances with much success, and they know they’re ready to take things to the next level. But they simply get confused by all the different titles.
Financial coaches and financial advisors are two of the most popular professionals someone can hire to help them with their finances. A financial coach (aka money coach) is perfect for helping you get better with money and meet your short-term goals, while a financial advisor helps people plan for the future and manage their investments.
In this post, I’ll explain the difference between a financial coach and a financial advisor and help you decide which is right for you.
Financial Coach vs. Financial Advisor: What’s the Difference?
What is a financial coach?
Coaching is a form of development designed to help a client achieve a particular goal under the guidance of someone else (aka a coach).
In many cases, a coach is there to help someone meet a particular athletic or professional goal. In the case of money coaching, a coach helps clients to meet a specific financial goal, in large part by changing their financial behaviors.
A money coach helps clients by:
- Identifying specific financial goals
- Creating a plan to help you reach those goals
- Providing education, accountability, and support along the way
But financial coaching is really about so much more than a single financial goal. As a money coach, I help clients to address every part of managing their finances. I work with clients to:
- Identify their spending values
- Create a monthly budget
- Pay off debt
- Identify and reach financial goals
- Overcome their limiting money beliefs
- Plan for retirement
- Increase their income
- Start investing
Think of a money coach as a personal trainer for your finances. Just like a personal trainer helps you get your body in shape, a money coach helps you get your finances in shape.
What is a financial advisor?
A financial advisor is typically someone who helps clients to build wealth and prepare for the long-term future. Unlike financial coaches, financial advisors don’t focus as much on the day-to-day finances. Instead, they help clients set and meet their long-term goals.
Financial advisors also often help their clients with:
- Investment management
- Retirement planning
- Tax optimization
- Estate planning
Should you hire a financial coach or financial advisor?
When you’re deciding which type of financial professional to work with, it’s important to think about the specific goal you want help with.
Most people are familiar with financial advisors, so they assume that’s the type of professional they should be working with. But the reality is that most people would actually be better suited to working with a financial coach.
When to hire a money coach
Work with a money coach if you want to change your financial behavior and reach your financial goal. If you’re interested in creating a budget, paying off debt, and saving for a big goal in the next few years, a money coach is a perfect choice.
You should also work with a money coach if you want someone who will provide accountability and support along the way. Financial advisors can help with a lot, but they won’t check-in to see if you’re sticking to your budget or talk you through your feelings when you’re struggling with limiting beliefs.
Money coaches are often the precursor to financial advisors. You might work with a coach to help get your money in a place where you’re ready to work with a financial advisor.
When to hire a financial advisor
Work with a financial advisor if you want help reaching a long-term financial goal, and want someone who will do a lot of the work on your behalf (such as managing your investments).
Financial coaches and financial advisors both have so much to offer their clients, and both are an important piece of your biggest financial puzzle.
Many people start with a money coach, and then eventually graduate to working with a financial advisor. Others work with both at the same time.