What is the difference between a Financial Planner and a Financial Coach?

When it comes to managing your finances, individuals often seek guidance from financial professionals. Identifying the right professional can be difficult when the industry itself uses multiple titles interchangeably and there is little regulation of titles.

Financial coaches might refer to themselves as money coaches, financial counselors, or even debt coaches. Financial planners go by an even wider variety of names: wealth advisor, financial advisor, fee-for-service advisor, fee-only planner, wealth management advisor, or Certified Financial Planner. It’s no wonder people are confused!

Most individuals have heard of or worked with a financial planner, while few have heard of financial coaches. Understandably so, since financial planning has been around for over 50 years, whereas financial coaching is a relatively new industry.

Although their titles sound similar, financial planners and financial coaches play a different role in helping their clients to make informed decisions about their money. It’s important to understand who they serve and when to utilize the expertise of a financial planner versus a financial coach.

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What is the role of a financial planner?

Since financial planners use a wide variety of titles and have differing ways that they get paid, we’ll be focusing on the role of an advice-only financial planner. An advice-only planner is ideally a Certified Financial Planner (CFP) who provides objective financial advice to clients without the sale of any financial product. An advice-only planner is paid only by charging fees directly to their clients, and their fees can be hourly or flat fee.

Advice-only financial planners may work with clients on a one-time engagement to fulfill an immediate planning need, or on an ongoing basis for accountability and plan updates.

Financial planners provide a comprehensive overview of a client’s financial situation, assisting with:

  • Retirement planning
  • Investment strategy
  • Tax planning
  • Estate planning
  • Insurance needs assessment

Certain real-life scenarios can help demonstrate the benefits of using a financial planner. For example, a financial planner may be more suitable if you are looking for help to determine if you are on track for retirement, or if you want to have a plan to accumulate or decumulate your assets tax efficiently.

Maybe you’re unsure about your investment fees and want to exposure different types of investment advisory options as well as DIY investing. Or perhaps you are planning to relocate to another part of the world and need advice around the complicated issues related to Canadian expatriation.

What is the role of Financial Coach?

Working with a financial coach can help align spending and savings habits with your values and goals, and to help you confidently manage your finances. If you are having difficulty understanding your financial situation and managing it to your advantage, then working with a financial coach may be a good option.

Financial coaches can help you take charge of your finances and provide a supportive, non-judgmental environment for you to get comfortable with the subject and make progress towards setting goals and alleviating financial worry.

Financial coaches typically work with clients on a fee-only advice model, and bill either flat fee or hourly. Depending on individual circumstances, the duration of a client’s engagement with a financial coach could range from a few sessions to several months or years.

Financial coaches focus on helping clients with:

  • Assessing their current financial circumstances
  • Building financial resilience to pay down debt
  • Creating a spending and savings plan (budget) regardless of their income or wealth
  • Developing healthy money habits
  • Establishing a simplified system to manage their finances, especially for business owners
  • Developing a cash flow roadmap to navigate life transitions such as leaving a job, starting a business, and marriage or divorce

What are a few real-life scenarios where a financial coach may be a good option? Maybe you are a high-income earner and you’ve taken on too much debt. Or you need help getting on the same page with your partner with spending, savings, or other financial goals.

Or you’re planning to upsize or buy a new home, and losing sleep about whether you can afford it. You may be wondering – can I benefit from working with a financial planner and a financial coach? The answer is yes! Often, clients may start out with a financial coaching engagement and determine down that line that they have a financial planning need; and vice versa.

Financial planning combined with financial coaching provides encouragement, confidence, accountability, and financial empowerment. An advice-only Certified Financial Planner with financial coaching experience may be able to assist with both types of engagements.

By considering these scenarios and evaluating your own financial goals and circumstances, you can make an informed decision about whether a financial coach or financial planner is the right choice for your unique needs. If you are unclear or have questions, contact us and we can determine if and how we can best assist.

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