Financial Planning

What is the Difference Between a Financial Coach and a Financial Advisor?

By  MarkTibbs

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The world of finances can be a hard one to tackle. For some, it can be downright overwhelming. When you try to poke your head above water and look for some help you are bombarded with a lot of options…financial advisors, wealth advisors, investment advisors, tax advisors, loan services, and on and on. Not to mention all of the crazy financial terms out there…IRA, CD, FHA, APR, DSCR, Equity, LTV, Gross Income, Fiduciary, Bonds, Options, Annuities…Who do you trust? What do you need?

You’ve worked hard to get to where you are today and you want to be able to enter the future with confidence doing what you love.

31% of young adults feel their biggest obstacle to savings is living paycheck to paycheck and only ½ of households have any retirement savings.

What is the best way to help tackle these obstacles so you don’t feel stressed out and trapped? A certified financial coach. Getting past the overwhelmed feelings of how to tackle your finances begins with a game plan. If you have a plan and are educated on how best to execute your plan, you’ll be able to walk confidently ahead into your financial future.

Let’s imagine you want to learn how to play baseball.

You know you will need things like a glove and bat, but you’re not sure what brand or type would be best for you. Plus, you need to learn how to play baseball, right?

Your next step would be finding a coach to help you learn all of the dynamics of playing baseball and understand what kind of equipment might work best for your style and the position you’ll play.

After working with a coach, you’ll be able to head over to the local athletic store and the salesperson there will help you find the tools you need that will fit what you’ve learned from your coach. You’ll know the lingo from your coach and be equipped to ask the right questions to find just what you need.

Financial coaching is just like this. A financial coach helps educate you through the finance world and dig into credit scores, credit card debt, loans, investments, and how they all work. The goal is to figure out a game plan for you – so that you can create habits and feel empowered to manage your money. A good financial coach is your trusted and friendly resource who always has your back.

Advice and recommendations come with one motive in mind: Helping YOU. There is no ulterior motive or incentive to move you toward a certain product or program. If a coach does their job well, everything is about the person they are coaching. The basic definition of a coach is to “instruct or train”. There are a lot of things that we never learn through school and life. Knowledge is power and you need the power to handle the challenges that may come your way.

Here are a few scenarios that you may have been working through or could come up with in the future:

Setting up an Emergency Fund

Throughout 2020 more people have started to see the need to have an emergency fund, a financial buffer. There is a realization that there can be a lot of unknowns that happen, and people need (and want) to get control of their finances so they can be able to handle these challenges that may arise.

  • Losing a job.
  • A natural disaster.
  • Health crises.
  • Family crises.

Coming up with a game plan and prioritization of things gives you the power to take control of your finances. Mentally this will free you up to be able to live more fully. Do finances make you feel like you are trapped? Like you are spinning out of control? That you don’t understand? Maybe you’re at the verge of tears because you don’t see a way to move forward? The process of building a plan together can help release this burden and put you on a track to take control. As a financial coach, we’re here to help you work through these feelings and challenges you are faced with today.

Student Loans

Did you know that 73% of students are graduating with student debt and 61% of graduates will end up taking a job they aren’t passionate about to pay off student loans. This can be a lot for a student to handle all at once when graduating. Student loans have a lot of complexities. Education on what options you have and how you can approach paying them off will be important for many years to come. These loans can anchor you down and make you feel like you must make certain choices to deal with them. A financial coach can help you understand your options so you can be in control and have a game plan to shape your future life decisions.

Handy Resources:

Q&A:

What is a financial coach?

“A financial coach is an advisor who can help you reach your financial goals by teaching you money management skills, such as how to build savings or pay down debt. A financial coach can help improve your financial literacy, but they likely cannot give you investment advice. Financial coaches often assist their clients with the behavioral and emotional components of managing money. A coach can help you unearth what drives your financial decisions, so you can create a healthier attitude that leads to better money habits.” – Excerpt from Article: What Is a Financial Coach and What Can They Help You With?

What is a fiduciary?

A fiduciary standard requires people who might give you financial advice to act in YOUR best interest, recommending or doing whatever will serve you best and avoiding any conflict of interest. Some advisers (like broker-dealers) may simply abide by a “suitability” standard, recommending or doing whatever is suitable for their clients. What’s suitable, though, may not be what’s best — and it might earn them a sales commission that a better move for you might not. Indeed, among your options for suitable investments, a nonfiduciary adviser might recommend the least suitable one. (Of course, many nonfiduciary advisers are still ethical and may serve you well.)

Supreme Court Justice Benjamin Cardozo famously referred to the fiduciary standard by noting, “A trustee is held to something stricter than the morals of the marketplace.” When you’re looking for financial advice, it’s smart to ensure that your adviser is held to the fiduciary standard, looking out for your best interest before his or her own. – Definition from Motley Fool Article.

Why do I need a financial coach?

People often haven’t had the opportunities to learn and understand all of the ins and outs of managing their day-to-day finances (this stuff historically has not been taught in high school or college). Education can help you prevent getting in some tough financial places and get excited for opportunities for the future. It’s about equipping you to take control of your life. A financial coach is not a sales person and will not sell you on specific things (should not be selling you things anyway, some may). A part of a financial coach’s job is to help you understand some of the elements of purchasing a car, a home, changing a career and the financial impact, etc. It can save you a lot of money having a game plan and being educated on things before you go in and talk with people involved in these areas.

Here are a couple of simple examples:

  • Advice and Inside Information: If you need to get some additional medical care after hours (say on a weekend) from a nurse or doctor – You should go to an “Urgent Care” clinic that is in your network, instead of an “Emergency” Clinic. It will save you A LOT of money. If it’s life-threatening, go to the emergency room, but if it is something that could be handled at a 24-hour “Urgent Care” clinic, you will likely see a dramatically different price point. Some emergency clinics don’t have to disclose the cost upfront, so you have no idea what you will be charged. It’s all about being educated and wise with how you use your money. At ENRY, we’ll help you with things like this, so if you ever need it, you’ll have a plan ready to go.
  • Car Purchase: If you are purchasing a car, there are some things we can work through to help you make the best decision for you. We’ll talk through depreciation and what that means. Purchasing a used car might be a better financial decision for you than a new car. What does the interest look like based on your credit score? Would the interest you end up paying, be different with a used car vs. a new car? We’ll equip you with the info you need to be able to go make the best decisions possible.

The goal is to help you be financially smart and be empowered with the knowledge to make informed money decisions and have good money habits. 

About the Author

Mark Tibbs, AFC®

ENRY Financial Coaching began in 2020. Mark is our head consultant. He is an Association for Financial Counseling and Planning Education® – Accredited Financial Counselor® (AFC®). Mark is a U.S. Military Veteran. He previously worked in the tech industry in engineering, sales, and management.

All his life, Mark has been passionate about money management and making smart financial decisions. In particular, he loves to coach young people. He wants to enable young people to make smart financial decisions so that they can build a solid financial future. Mark has spent hundreds of hours teaching personal finance classes as well as one-on-one financial coaching sessions.

He has a knack for breaking down complex concepts into easily digestible bites.

ENRY Financial Coaching website
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Disclaimer: In order to make Wealthtender free for our readers, we earn money from advertisers including financial professionals who pay to be featured on our platform. This creates a natural conflict of interest when we favor promotion of our clients over other professionals not featured on Wealthtender. Learn how we operate with integrity to earn your trust.

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