Updated: Oct 5
Money coaches vs. financial advisors. When would you need a money coach? A money coach works differently from a financial advisor. While most people have a vague idea of what a financial advisor at an established financial institution does, few of us are aware of the role of a money coach.
I want to clarify the differences between these two roles and their unique approaches to the arena of personal finance.
Financial advisors typically work for a financial institution such as a bank or brokerage.
They help you build your assets by recommending products.
They are usually paid either a commission for the products they sell you or a fee based on the value of assets they invest on your behalf.
They create projections based on numbers — such as how much you need to invest to achieve your retirement goals.
They typically work with clients who already have assets.
Money coaches are usually self-employed.
They offer unbiased advice since they are not representing a financial institution.
They focus on the esoteric ideas of money — such as creating a wealth mindset and emotional literacy around your finances.
They help you nurture a healthy relationship with money.
They work both with people with or without assets.
They are fee-based as opposed to commission based.
They don’t recommend products.
They can’t tell you where to invest.
They provide you with strategies — based on modifying your behavior—to help you achieve your financial goals.
They use esoteric techniques to manage money — such as meditation, to uncover limiting beliefs. Or tapping to release money trauma.
They don’t tend to use as much financial jargon.
You need a money coach if:
You have a good income but little to show for it.
You never seem to be getting ahead.
You have goals for a different life but don’t have a road map to get you there.
You’re terrified to look at your financial situation. You wouldn’t even know where to start.
You’re wondering, “Should I pay off debt or save?”
You’re in a period of transition — retiring or changing careers but don’t know how to plan for it.
You are suffering from guilt, shame, and fear regarding money.
Bringing it together
The most significant advantage to a money coach is their objectivity when providing suggestions because they don’t work for a financial institution. But that means they are not in a position to invest your investments on your behalf.
But they may be able to recommend a financial advisor who can do that for you. Financial institutions have traditionally taken a numbers approach to money management.
A money coach goes beyond the numbers — by looking at your mindset and helping you change behaviors and beliefs blocking you from managing your money effectively.
We all know that money is more than just numbers is an emotional topic.