You may think that a Financial Coach and a Financial Advisor are similar, but you couldn’t be more wrong. It’s important to know the difference if you’re considering hiring a professional to work with you on your financial matters.
A financial advisor focuses on your portfolio and provides specific advice for your investments. You give them control of your assets and they manage the money you already have.
A financial coach does not manage your investments for you. Instead, they focus on your education and help you make financial decisions so that you can build the skills you need to manage your own money. You always remain in control of your money, but you learn how to make better financial decisions and manage your money in a way that works for you.
Which one is a better fit for your needs?
The short answer is, whichever best matches your current needs. Do you want someone else to manage your funds for you or do you want to learn how to make better informed decisions and manage your money yourself?
Either way, you need to be better educated about your financial options. You need to be able to trust the advice you receive from a financial advisor and understand what you’re being told. So, educating yourself should be a must whether you hire a financial coach or a financial advisor.
With a financial advisor, it’s important to understand that they will be making most of the decisions about your portfolio for you, with your permission of course. They will discuss the options available to you and do their best to help you understand what your choices are. But if you don’t already have a fair understanding of your financial options, you may feel challenged to make the right decision leading you to depend on a financial advisor too much.
In working with a financial coach, you need to understand that they will never provide specific advice about how to allocate your investment funds or where to move your assets. Their sole purpose is to educate you so that you can make well informed decisions on your own.
A financial coach does not receive a percentage of your investments as payment so they are completely unbiased about how you should invest. Instead, they help you develop the skills you need to choose an advisor that is a good fit for you. They also help you to understand the differences between working with an advisor and managing your money on your own.
Based on your current financial position and your financial goals, a financial coach can help you understand the different approaches you can take to reach your goals and how you can work toward those goals on your own.
All in all, even with the differences in financial advisors and financial coaches, there’s a chance you’ll need to work with both. Working with a financial coach first will help you be better prepared for working with an advisor and it will help you feel more confident about the advice the advisor is offering.