The difference between a Financial Coach and a Financial Adviser

Your first impression of financial advice will probably be a traditional adviser, either an individual or a company specialising in different areas of financial advice.

Financial coaching is a new type of service that’s not dissimilar to life coaching, providing an alternative to traditional financial advice. 

Financial advisers are regulated by the Financial Conduct Authority (FCA) to give ‘advice’. You can expect an adviser to provide specific product recommendations whereas financial coaches aren’t regulated in the same way and don’t provide product guidance. 

Instead, financial coaches take a holistic view of your financial situation, taking the time to understand your financial goals and behavior around money.

Are you a saver or a spender? Do you struggle sticking to a budget? Are you looking for quick wins or have you got a long term goal? A coach will inform and empower you, giving you the confidence to make your own financial decisions. 

Traditional financial advisers often also require a minimum asset level to advise on investments or financial planning, whereas financial coaches can provide support no matter what your asset level or where you are in your financial journey. 

What about fees? There’s no hard and fast rule but advisers tend to charge a management fee or charge for providing a specific service whereas financial coaches charge for their time. How much you pay varies from coach to coach, depending on their level of expertise and experience. 

Let’s summarise the main differences between a financial coach and a financial adviser:

A financial coach is: 

• Trained but not FCA regulated 
• Skilled at reviewing your overall financial situation and goals  
• Able to help you develop a financial plan to achieve those goals  
• Happy to discuss the pros and cons of various financial products but can’t recommend a specific one for you 
• Comfortable working with anyone, whatever their situation  
• Going to charge for their time 
• Can help you improve your finances in the short-term. While financial advisors can help with long-term investing strategy, coaches focus on getting you in shape to invest in the first place.
• Coaches may be more in-tune than financial advisors on issues like debt repayment and budgeting. Coaches can help you create a plan to get out of debt, or help you make a monthly budget that helps you start saving more money each month.
• Financial coaches give you someone to be accountable to for your everyday financial decisions. Unlike financial advisors who may only meet with you a few times per year, many financial coaches have weekly check-ins to keep you on track.
• Coaches cannot provide complex financial advice or investing strategies. While coaches focus on helping their clients get their day-to-day finances in order, they are not qualified to give investing advice.

A financial adviser is:  

• Regulated and authorized by the FCA to recommend specific products to clients or is independent and able to offer ‘whole of market’ solutions 
• Suitable for people who have little to no debt, and a certain asset level to invest 
• Going to charge a fixed or management fee, typically 0.75-1% of their client’s assets with initial fees on top 
• Able to answer specific questions, e.g. which pension you should take out and what your retirement income will be