Financial Coach or Advisor, which do you need right now?

There are many professionals available to help you with your finances, but which one do you need when?

Financial Coaches, and Financial Advisors both aim to help you with your finances. You may need one or both on your team depending on your situation.

Financial Coach

A financial coach works with you to help develop better habits and behaviors with money. No matter your age or financial position, most of us could stand to improve our money behaviors. That may be around intentional spending, budgeting, increasing savings for retirement or other life goals, getting out of debt, or perhaps paying for college for yourself or children. Financial coaches help you define these goals, coach you toward a plan to reach those targets and can guide you through your plan to achieve your full potential.

Financial coaches do not sell investment products. They share their experience and work with you on the nuts and bolts of your finances to guide you to the best decisions you can make with your money. Financial coaches can work with everyone, even those with little or no savings right now. At the start of your financial journey (which is NOT age dependent), a financial coach is the right professional to help you get things headed in the right direction: The direction of your success, however you define it.

“I absolutely believe that people, unless coached, never reach their full potential." -- Bob Nardelli, CEO, Home Depot

Financial Advisor

A Financial Advisor can be another valuable part of your money team. Financial Advisors focus on your money's behavior. They recommend investment tools, such as mutual funds, and can help you set up IRA's, college savings plans, individual or joint investment accounts, or other appropriate types of investment accounts for your situation. These key professionals typically manage your investment portfolio and are tasked with maximizing your returns from these investments within your risk tolerance. Financial advisors are usually part of a brokerage, and are licensed to sell securities such as stocks, bonds, and mutual funds. They spend much of their time researching and gathering information on various types of investments to make the best recommendations for their clients. While you can certainly invest on your own these days through various on-line platforms, your financial advisor is someone who spends most of their time gaining knowledge of the market and the investments available to maximize your returns. For those with little or no savings (yet!), a financial advisor may be a step or two away from being able to provide value on your financial team.

Advice worth paying for

Financial Coaches and Financial Advisors both provide valuable services and are each part of a strong financial team. Hiring either or both will make reaching your financial goals more likely. While they have these strengths in common, another difference is in how you pay them for this guidance. A Financial Coach sells only their services. They typically charge per session for the time that they spend on your finances, both meeting time and preparation to meet with you. You often can pay ala carte for each session, purchase a package for a certain number of sessions, or some combination of each. Purchasing a package is often the most economical decision, as you may want follow-up and some accountability that additional sessions provide. A Financial Advisor can also be paid directly for their time and services, but more often are paid either a commission based on the investments purchased or as a percentage of your total investment portfolio with them. In the previous article (click here) I gave information on what the difference of these methods is and how to decide which is best for you.

Preparing to Win

Bobby Knight, coach of the National Champion Indiana University men's basketball team once said, "The key is not the will to win. Everybody has that. It is the will to prepare to win that is important." The same can be said of your finances. Depending on your situation, your preparation to win will be aided from the guidance of a Financial Coach, a Financial Advisor, or perhaps both. The key is to get someone on your team!