Understanding the Role of a Financial Coach: Is it Worth Hiring One?

You may want to manage your finances yourself, but sometimes you need some help.

It can be difficult to understand your budget, debt and investments, especially if you’re pressed for money and don’t have much experience.

If that’s the case, working with a financial advisor could be a good idea. You can hire these experts to help you improve your financial situation. A financial coach will provide you with strategies, new perspectives and a plan to manage your money.

Learn more about the benefits of financial coaches and how you can find one to help your family.

Table of Contents
What is a Financial Coach?
What is a Financial Coach?
How Can someone become a financial coach?
Where Can I find a Financial Coach near me?
Financial Coach vs. Financial Advisor
What is the value of a financial coach?
What is a Financial Coach?
Financial coaches will help their clients to better manage their money and provide them with the knowledge they need. The coaches will help their clients achieve their financial milestones and goals. Financial coaches cannot provide specific investment advice but they can help you improve your financial literacy.

Financial coaches don’t tend to manage their clients’ assets, which is the main fee other financial service professionals take.

They usually charge an hourly rate (up to $300) or offer their own packages. In the United States, financial coaches can earn up to $65,000 annually.

It is lower than a financial adviser, but financial coaches require less rigorous certifications.

What is a Financial Coach?
You will begin by sharing your financial goals with the financial coach and tracking your expenses and spending so that they can understand your financial situation. A financial coach can then help you with:

Spending habits
Budgeting: How to create and organize your budget
Create a plan of action that includes multiple aspects
How to save and build an emergency fund
You can improve your financial mindset by focusing on your emotions and mentality towards money
Create a plan for paying off your debt after you have analyzed it
Financial Coaches: Their Process
Financial coaches usually consult with their clients in order to determine the main issues and to learn what financial goals they hope to achieve. Financial coaches will then implement strategies to help their clients reach their goals.

Let’s say, for example, that I would like to save money for a vacation, but at the moment, my spending is out-of-control and I heavily rely on credit cards. The financial coach can teach me the 30-day rule for impulse spending, and encourage me switch to a credit card with prepaid funds to better manage my budget.

After a few months, you’ll likely start thinking about building an emergency fund. Then, your focus will shift to planning that important vacation.

You can rest assured that coaches are paid for their services, so their interests will be aligned closely with those of their clients. Coaches do not have an incentive to promote certain products, nor are they paid based on performance.

Want to see all your expenses, investments and spending in one place? Personal Capital is a free tool that can help you keep track of your finances and visualize them.
How Can someone become a financial coach?
Even if you have no desire to become a money coach, it is important to understand how they got this title and what services they offer. You can use this information to ensure that you choose the right person and one with experience that you can trust.

Financial coaching is still a relatively young industry. As a result, there are few regulations regarding the qualifications required. This means that anyone can become a Financial Coach. The client is responsible for doing their own due diligence.

Even though formal education is not required, financial coaches still receive a thorough financial education that may also include aspects of psychology. A number of programs offer training for financial coaches.

If you are looking for a coach, it is important to find someone who has been certified by AFCPE as an Accredited Financial Coach or Financial Fitness Counselor. This will ensure that your coach is knowledgeable and skilled. On the AFCPE’s website, you can find a coach.

Where can I find a financial coach near me?
Remember that every coach will have their own style. Some coaches prefer a more holistic approach, while others use a traditional method. Decide which style of coaching you prefer before searching for local money coaches.

Remember your favorite teachers from school and explain why. You should also consider why you require a financial advisor.

The next step is to research and screen candidates who are searching online. You should not assume that someone with an impressive online presence is completely genuine. Instead, you should offer a consultation for free or gather as much information about the candidate as possible.

Find out whether your financial coach, for instance, has a background or education in finance or education. Check out the AFCPE site for coaches with additional credentials.

A coach’s knowledge and expertise can be confirmed by a certification from the National Financial Educators Council.

You can also test out a few coaches and determine which is your favorite. Most coaches will allow you to “try before buying”. One session should cost anywhere between $100 and $300, so you shouldn’t make any commitments until you are sure.

Financial Coach vs. Financial Advisor
Financial advisors and financial coaches have vastly different roles. Financial planners and advisors are directly involved in the handling of assets and money. Their goals are centered on specific strategies and products. Financial coaches help you develop good money habits by working with you and your money.

Financial advisory is a highly regulated industry, and its regulatory body controls it. Financial advisors must be careful about what they say, especially in regards to marketing materials and guarantee. They could face fines if they don’t.

Financial coaching is not regulated and does not require any specific qualifications. Financial coaches are not licensed and therefore cannot provide you with specific investment advice or suggest useful products. While they may be a partner, it is you wholly responsible if your finances fail or succeed based on the guidance of financial coaches.

If you work with a financial advisor, it means that you will still have to make your own decisions and manage certain assets. If you are looking to be more hands-off then you may want to consider a certified financial planner or financial advisor.

Pricing varies from financial advisors to financial coaches.

Many financial advisors choose to charge assets-based management fees. This can also mean that they own up to 3% of your wealth, and have an interest in its performance. Financial coaches charge hourly rates, which are usually cheaper over time.

What is the value of a financial coach?
The value of a personal finance coach is in helping you create a plan, and staying motivated through the entire process. It is important to save you time, but also create a plan for you and your family that benefits you. The main work will still fall on your shoulders, but it can be a great way to educate yourself and stay focused.

A good financial coach is worth your time and money because they will help you organize and simplify money management so that you can start taking action. Working with a financial advisor for a short period is worthwhile if you don’t know where to begin, are limited in time and lack motivation.

If you are eager and motivated to learn, it should be easy for you to manage your finances and personal finances on your own. There is nothing wrong with asking for help. The money you spend on a coach will pay off in the long run.