Which is right for me? Financial Coach or Financial Advisor?
Posted on February 08, 2025 by Dee Zimmerman, One of Thousands of Money and Finance Coaches on Noomii.
Many don’t know the distinctions between financial coaches and advisors. Coaches are here to help in powerful ways! Learn the 5 key differences.
As a coach, I often experience the challenge of communicating how I help others. One specific challenge is explaining the differences between financial advisors and financial coaches. Many don’t know the distinctions. And many don’t know coaches are here to help in some powerful ways!
WHAT IS A FINANCIAL ADVISOR?
The title Financial Advisor is an umbrella term for lots of different financial experts. Examples include investment advisors, broker-dealers and brokers, certified financial planners, financial consultants, portfolio managers, and wealth advisors. Credentials differ, as well as fee structures. The most common fee structure is AUM (Assets Under Management) where the advisor charges a percentage of your total assets, annually. A cost-effective structure less common is an hourly or flat fee. And there are those that earn commissions directly from mutual funds or other financial products, which presents a significant conflict of interest.
WHEN TO WORK WITH ONE
Nearing Retirement: While you’re working and saving, your investment goals are pretty simple—growing your assets! You can make these grow on your own, with just a little education and a simple approach. However, as you near retirement, things get more complicated. This might be a good time to connect with a financial advisor. The best ones are Certified Financial Planners (CFP). Make sure they work solely on your behalf—no products!). And always carefully vet because there are a lot of bad ones out there, which is unfortunate for the good ones!
Managing Emotions: You may want to work with a financial advisor even earlier if you have accumulated assets, and you believe you would react to the market emotionally with those investments. Experts can give you perspective, and help you stay the course.
WHEN TO WORK WITH A FINANCIAL COACH
Know the 5 key differences so you can choose what’s right for you.
1 – TIME AND ATTENTION: Coaches are much more hands-on, like your personal trainer in the gym—demonstrating, observing, challenging, tweaking, and encouraging. We meet frequently and are with you every step of the way, on your journey to financial health.
2 – DIGGING DEEP: Coaches dig deep to examine and free you from the money history, perspectives, and behaviors that are tripping you up. Again, just as a fitness coach will seek to understand your unique struggles, we will do the same, and help you change your money.
3 – COMPREHENSIVE: Coaches will address every area of your money world, and help you build competency in areas that are lacking.
4 – RELATIONSHIP TO YOU: Coaches are 100% in your corner! Good advisors are fiduciary and nothing else (legally obligated to act in their client’s best interests), and so are we. But because coaches will never manage your assets, we usually work based on a monthly fee or program fee.
5 – CREDENTIALS: Coaches typically do not have the licenses and certifications of financial advisors. A coach is focused instead on helping you untangle the knots in your money world so you can save. And while a coach can educate about the investing world (as I do), they will not recommend specific stocks or funds.
WHAT MAKES DZ FINANCIAL COACHING UNIQUE?
We take a balanced approach, addressing both the money mindset of things along with practical systems to make money management simple and effective. We also balance honesty with compassion. In private coaching, we journey through these 5 steps:
1 – KNOW WHERE YOU STAND: We’ll do a deep-dive money assessment, identifying the gaps in your money world, your unique challenges, and your concerns.
2 – KNOW WHAT YOU WANT: Here, we’ll talk about your dreams for the future along with your short-term and medium-term goals. We’ll see how that stacks up with 7 financial milestones, and we’ll plan your progress, prioritizing the right goals at the right time.
3 – KNOW YOUR RELATIONSHIP WITH MONEY: You’ll need a healthy mindset and healthy habits to make good progress with your money. We’ll look at your money past and present and gain a deeper understanding of your perspectives and behaviors. And we’ll find ways to have your relationship with money work for you, so you’re in control.
4 – PUT YOUR SYSTEMS IN PLACE: This is heavy on the practical side of things. Without good systems, good habits can’t be formed. You’ll learn to track your money effectively, do routine money audits, strategize for financial emergencies, optimize your accounts, and automate. With these systems in place, your confidence will grow and you’ll be able to make real progress.
5 – BUILD FINANCIAL FREEDOM: You’re well on your way now! Here, we’ll get serious about your financial future, where work can become a choice, rather than a must! Maybe you’ve never believed it was possible? We’ll make some projections, create a timeline, and review your plan to be sure you’re doing all you can for your financial freedom.
P.S. Speaking of the differences between financial coaches and financial advisors – not all coaches are comfortable talking about the investing world and retirement planning. But if you’re ready to learn, you’re in the right place! It is my mission to fill the education (and confidence) gap by coaching on this subject. With just a little education and a simple approach, you can manage your investments on your own! Don’t miss my article on “5 Ways to Manage Your Investments.”
If you need to work through the private coaching journey described above, let’s start there. That’s my core program. But if you already have your “ducks in a row,” consider retirement coaching so you can feel confident managing your investments on your own, and planning for that day when work will be optional!
dzimmermanfinance.com
