Financial Coach vs. Financial Planner: Which One Is Right For You?
Friday, July 9th, 2021

Most consumers realize along the way that some concepts about money aren’t inherent knowledge or readily available to learn. In addition, not all of us have an educated or experienced family member, teacher, friend, or outside resource to walk us through daily money management. So, many of us will flounder in one or more aspects of personal finance throughout our life.

Think about it – every moment of every day involves using finances. It’s a 24/7 reality 365 days of the year. Whether driving down the road to work (using up motor fuel and relying on auto insurance coverage in case of an accident) or at home enjoying a movie with the family (surfing the internet, using electricity, and eating popcorn purchased at a store), each moment in our lives revolves around monetary decisions.

Financial coach vs financial planner: Who is right for you?

Every financial interaction requires assessing options, asking practical questions, finding the best resource, and utilizing several abilities that may not come naturally. However, individuals may need to look to a financial professional if there is no prior teaching, guidance, or experience.

The question remains, who can best assist you when the need to dive into a new kind of financial situation arises? There are two kinds of financial service professionals that may provide support, point you towards reliable resources, and offer guidance at these times: financial coaches and financial planners.

So, how does a consumer decide where to go when seeking financial guidance?

For those in debt, struggling to live day-to-day on their current income, or looking for essential money management support, the assistance of a financial coach or counselor may be an excellent first step. On the other hand, anyone ready to take a broader view of life and their money, including starting or enhancing their investments and savings, consider contacting a financial planner.

What is a financial coach?

Financial coaches and counselors offer a variety of services and come in all kinds of stripes. For example, they may hang out their shingle and work independent of other businesses, or they may operate within organizations or institutions such as the following:

· Non-profit credit counseling and debt repayment services

· Other non-profit, non-government, and community-related organizations such as services for disabled, elderly, and college access groups

· Credit unions

· Banks and other creditor related businesses

The services offered by these groups may vary tremendously. Organizations provide a broad array of services from basic budgeting to debt repayment and management to government-supported low-income tax services to student loan related services and more.

Also, the approach to working with clients, as most groups call their customers, often depends on the IRS status of the group (i.e., 501C-3 non-profit) or the organization’s mission as established by leadership and boards of directors. Always research ahead of utilizing or making agreements with any of these services. The internet is full of resources that provide information to help you make the best choice based on your current needs.

Questions to ask a financial coach

But you may want a starting point. Here are some questions you must ask to ensure that you’re working with a trained and ethical professional or group:

1. Credentials – does the professional or group require its employees to hold nationally recognized certification or credentialing? Groups such as the Association for Financial Counseling & Planning Education® (AFCPE®) and the National Foundation for Credit Counseling (NFCC) publish lists of professionals and offices that offer substantial training and national credentialing.

2. Education – does the individual or group offer financial education in addition to other services? When educational resources come as a value-add to financial help, it’s obvious the professional or group has a comprehensive and holistic approach to providing services.

3. Cost – costs may vary significantly in these services. Be sure to research and inquire if the same services are offered for less or possibly as part of a group plan through an employer. For instance, many employers offer Employee Assistance Programs that include some form of financial counseling.

What are financial planners?

Now, let’s talk about another source of support for financial decision-making: serious saving and investing become the next step for individuals.

Financial Planners, compared to financial coaches, are investment advisors and professionals who often focus on long-term investment strategies. By doing so, they help their clients reach goals, typically related to education and retirement. Probably the most recognized designation for a financial planner is the Certified Financial Planner (CFP®).

Although most financial planners are fully capable of helping clients with day-to-day money management, it’s wise to utilize the services that they are most qualified to address. In addition, they often have specializations in their background that help in specific areas, such as choosing investment and savings vehicles to help you prepare for a child’s education or retirement planning. These professionals are generally reimbursed for financial planning advice and services that aid broader areas in life.

Where a financial planner can help

Foremost, be sure to research and find professionals who adhere to a fiduciary standard. Essentially, these professionals will always work in the client’s best interest regardless of how it affects their interests. Here are some things an excellent financial planner can do for consumers:

· Help you take stock of your short-term and long-term financial goals

· Guide you to take stock of investments, insurance purchases, and tax considerations to meet said goals

· Show you your present financial picture, like where and how you’re spending your money

· Figure out budgeting options that will allow you to save for objectives, such as retirement

· Possibly manage investments according to your needs or wants

Again, employers often add limited visits with a financial planner as a part of employer offered savings programs, such as a 401K.

The takeaway

Remember, learning along the way will empower individual consumers to make better choices and decisions over the years. An excellent financial coach or counselor will never use the word “should” or say, “you need to…”; in other words, offer advice. Even though a financial planner is authorized to offer advice, those who have the client’s best interest at heart will always seek to assure that the client’s values, goals, and aspirations are met above all else.