A financial coach is a person who is trained (and trusted) to look at your finances and identify opportunities to better manage your money. Instead of making decisions for you, they’ll focus more on teaching you money management skills to help you become more confident in reaching your financial goals.
What is Financial Coaching?
Financial coaching is a specialized type of coaching that helps people develop financial literacy and money management skills. Separate from financial advisors, a financial coach might help you learn to create a budget, talk to your partner about money, or unpack unconscious beliefs that are affecting your spending habits.
What should I expect from a financial coaching session?
A typical coaching session lasts 45 minutes. During your session, your coach will help you clarify your financial goals, explain the options you have for achieving them, and help you create a plan to get there.
They can also answer any questions you might have about finance. The format is intentionally flexible so that you can guide the session based on your needs and get the most out of it.
Are financial coaches the same as financial advisors?
There are no official licensing requirements to become a financial coach. Anybody can offer financial coaching. That being said, most financial coaches usually have at least some training in finance. They may have professional licenses, a degree, or years of experience in the financial industry. Some even choose to get accredited through an independent agency, like the Association for Financial Counseling and Planning Education (AFCPE).
The Financial Industry Regulatory Authority (FINRA) and state/federal governments restrict the use of certain titles, like ‘certified financial planner’ or ‘investment advisor.’ Financial advisors are typically employed in that role and usually hold a degree in finance. Unlike financial coaches, who provide advice and coaching, financial advisors are usually affiliated with a certain company or product. While they may charge for advice or planning services, they often make their fees from the sale of financial products.
Because of the nature of their work (and the high fees often associated with in-person financial planning), advisement can be costly. You typically have to have a net worth of over $250,000 to work with a financial advisor.
What does a financial coach do (and not do)?
- Determine your financial goals and create a plan to achieve them
- Pay off debt, like student loans or credit cards
- Learn about personal finance and how to make good money decisions
- Raise your credit score for future financial goals, like buying a house or starting a business
- Learn what stage of retirement planning you’re in and ensure that you’re on the right path for a financially stable retirement
- Build an emergency fund for a rainy day or in case you lose your job
- Understand different financial products and which ones make the most sense for you
- Drive behavior change by understanding how your money habits and financial life affects other areas of your life
How to find a financial coach
If you prefer to work with an independently certified financial counselor, the AFCPE’s website is a good place to start. They maintain a directory of people who have earned the Accredited Financial Counselor or Financial Fitness Coach designation.
If you trust the company and the person, it’s fine to take advice from someone who is selling a product. Just because someone is selling something doesn’t mean that they’ll just push anything on you. In my experience, anyone that’s trying to sell you a financial product actually wants you to get the most out of it.
Financial coaching is a type of coaching specifically tailored to the client’s individual situation. These professionals are a blend between traditional life coaches and financial advisors.
While they generally don’t give specific financial advice, they can help you improve your overall financial wellness. Financial coaching services often include creating a spending plan, understanding your cash flow, and paying off credit card debt.
Unlike financial advisors, financial coaches help clients understand how their attitudes and beliefs affect their overall financial situation. They help reduce financial stress, which can help improve well-being and resilience.
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