Since starting our Financial Coaching business, we’ve been frequently asked what’s the difference between a Financial Coach vs. Financial Advisor. To be honest, if I had a Cosmic Treadmill, like the Flash (comic book hero), that allowed me to travel back in time to visit myself precisely 5 years ago, I wouldn’t have been able to fully articulate the difference between the two either. If you’re a sports fan think of your favorite team’s coaches. They condition players for different plays and scenarios. They never jump on the field or court during a play but they constructively encourage and hold players accountable to team goals. That, my friend, is what Financial Coaches do.
In fact, those who are familiar with what a Financial Coach is may not realize that debt-free people also can use the services of a coach. A financial journey doesn’t end at being debt-free so oftentimes, people seek guidance on what should happen next. I think we all can agree that this is a good problem to have but understanding how to adequately secure your family and future is a process. Although Financial Coaches are multifaceted, here are five things to remember about them:
- Coaches provide fundamental principles that encourage healthy money habits.
- They guide clients through identifying and understanding available options and resources without judgement.
- They empower clients to take control of their financial situations despite what their current situation may look like.
- Coaches inject hope by focusing on future goals and not past mistakes.
- They encourage married couples to work together to achieve financial goals.
Let’s face it, divorce is expensive. Healthy communication and making the numbers work in a relationship is so much cheaper financially and emotionally. Bankruptcy is stressful and scary, so having someone guide you through avoiding that process or giving you options while going through it turns a losing situation into a win. Not saving or saving very little for your kid’s college or your retirement can be catastrophic and overwhelming. Having a coach to assist you in getting on track will ensure you are living the retirement life you worked so hard for. Your kid(s) will be afforded an opportunity to further their educational goals without falling head first into the student loan trap. Financial instability is nerve-racking and is a heavy burden to bear but a coach can help with achieving financial fitness. Not knowing your options or what to plan for can leave you paralyzed, resulting in little or no action. Financial Coaches can guide you through available options that align with your goals.
Now that you understand what a Financial Coach is, let’s understand the relationship between them and a Financial Advisor. Think back to when you were in grade school and how each class gave the fundamentals for what would be expounded on in the following year’s classes. That is the relationship between a Financial Coach and a Financial Advisor. Financial Coaches focus on laying a foundation that facilitates good money habits so that you can successfully move to the next phase of your financial journey with an advisor. They do not sell investments or provide analysis on which investment vehicles are right for you. They also do not sell retirement or insurance products. These are characteristics of a Financial Advisor.The more financially fit you are, the more flexibility and opportunities you’ll have.
My husband, being the movie buff that he is, recalled a line from the movie Any Given Sunday that Coach Tony said to his team in the locker room before the playoff game: “One inch at a time, I can’t do it for you.” It’s so unembellished, but sums up the relationship between a coach and client. Financial freedom is a lifestyle that relies on you taking a step towards your goals. Coaches can’t take that step for you but you’re certainly not alone when you do take it.
