Financial Coach vs. Financial Advisor: What’s the Difference?
This is a common question that financial coaches get asked. A lot of people don’t understand the nature of our trade and how a financial coach differs from a financial advisor. That’s understandable though, as the financial coaching industry is still a relatively new industry. I was a financial advisor for over 20 years, I myself didn’t see the difference until I dove into financial coaching. The differences are vast in some areas, like financial literacy. Helping people understand the WHY behind making financial decisions and dealing with the emotions that go along with our financial lives. Personal finance is 80% behavioral and 20% knowledge.
So let’s define what advisors do versus what I do, because we each have a unique role to play.
Financial Coach vs. Financial Advisor: The Bottom Line
The difference can ultimately be summed up in a few short sentences.
A financial advisor focuses on how your money is behaving. Your money is going up or your money is going down. This is how much risk your money is taking. A financial coach focuses on how you behave with your money. This is how you can save more money on a consistent basis. This is how you can make better decisions about where your money is going.
What exactly does this look like? I’m glad you asked!
A financial advisor works with the money that you already have and makes sure that it will grow over time in good investments.
By contrast, a financial coach works with you to ensure that you have money available to invest.
A financial advisor manages your investment accounts and regularly researches the market so that he or she can make the best recommendations for your investments.
On the other hand, a financial coach helps you to manage your spending each month so that you can pay off your debts, have an emergency fund, and build wealth with your then freed-up cash flow.
A financial advisor works to mitigate risk in your investments by diversifying your portfolio.
But a financial coach helps you mitigate risk in your household by working with you on paying off your debt, building your emergency fund, having proper insurance coverages, and forming holistic life goals.
An advisor manages investments in your kids’ college fund.
A coach helps you work saving for college into your monthly spending plan.
Think of what good coaches do. They push you, hold you accountable, encourage you. They know the plays and strategies, draw them up and have you execute them. They push you beyond what you think you're capable of. They challenge your mindset. A good coach sets you up for success, drills the basics and builds upon them. They help you overcome adversity. They celebrate successes with you and show you, your growth when you don’t see it.
Each Excels In Our Respective Lanes
Are you seeing the pattern? The advisor, as an investment professional, tends to take more of a passive role in your daily financial life. But I, as your coach, help you do the right things each and every day.
As your coach, I work with you on your unique situation and help you form an action plan to make financial gains month-to-month, and year-to-year. My concern is not only the health of your retirement accounts but the health of your entire financial situation.
Both a financial coach and a financial advisor play important roles in helping you with your financial goals. The advisor grows the money you invest. But a coach will help you find more money to invest with. Both of us are here to help you find the financial freedom you’re looking for.
Have more questions about what I do? Let’s chat about how I can serve you.
Book your free consultation today to start on your path to financial freedom!
This article was originally published by Financial Coach Seth Connell in May 2019. It has been modified and republished with permission.
