Financial Coach vs. Advisor: How to Decide Which One Fits Your Financial Goals

It’s ok to ask for help, and that’s especially true when it comes to our money. However, looking for help can be overwhelming, and the different options can make it tough to decide who is the right fit for you.

We get a lot of questions around whether you need a financial coach vs. a financial advisor, so in this article,we'll delve into the distinctions between the two, including their services, pricing models, and suitability for various financial objectives.

What’s the difference between a Financial Coach and a Financial Advisor?

Financial coaches provide education, support, and accountability to help individuals achieve their financial goals.They focus on budgeting, debt management, saving strategies, and behavior modification. Unlike financial advisors, coaches do not offer investment advice or sell financial products.

Their holistic approach addresses both financial habits and the psychological aspects of money management. Coaching sessions typically involve goal setting, budget reviews, and ongoing support for sustainable financial habits.

Financial advisors offer comprehensive financial planning services, including investment management, retirement planning, and estate planning. They tailor strategies based on clients' financial situations, goals, and risk tolerance. Advisors may recommend specific investment products such as insurance products, stocks, bonds, and mutual funds.

What training do these professionals have?

Financial advisors are licensed and regulated, holding certifications like Certified Financial Planner (CFP) or Chartered Financial Consultant (ChFC). These certifications require rigorous courses and exams, with different levels. For example, in order for an advisor to sell securities, they must hold a Series 7 certification. Clients typically engage advisors for long-term wealth building and management, focusing on specific financial milestones.

While the financial coaching industry is less regulated, there are still certifications that a potential client should look for to ensure they’re hiring a trained financial coach. The most common certification you’ll see is the Accredited Financial Coach (AFC).

How much does it cost for expert help?

Financial coaches typically charge hourly or monthly rates, ranging from $75 to $300 per hour or $200 to $800 per month, similar to a therapist or personal trainer with whom you work with in 1 hour sessions.

Many coaches also offer package deals for ongoing support or targeted financial goals, like credit card debt payoff or building a healthy financial foundation.

There are also tech-enabled options like Habit Money that offer coaching via text supported by a self guided app experience to teach healthy financial habits, charging between $29 and $49 per month on a subscription basis.

Financial advisors may charge fees based on assets under management (AUM), typically ranging from 0.5% to 2% annually. They may also charge hourly fees, flat fees for financial plans, or commissions on products sold.

It's essential to clarify the fee structure upfront to understand the total cost of services, as well as the advisor’s incentives to ensure they are aligned with your own.

How do I know whether a coach or advisor is right for me?

Financial advisors are typically sought by individuals with higher net work or more complex financial needs, but many have a minimum asset requirement ranging from $100,000 to several million dollars. That said, there are many advisors who are focused on “high net worth potential clients”, working with people earlier in their careers and growing along with them.

Financial coaching may be more accessible to individuals with lower income or savings levels, or people who are still early in setting up their financial foundations. Coaches provide valuable guidance for those struggling with debt, living paycheck to paycheck, or establishing a savings safety net. They’re also able to help uncover unhealthy habits or deeper emotional drivers that may be holding clients back from achieving their goals.

Assess your needs and make the decision

The biggest determinant in who you need to work with is where you are at in your financial journey. If you’re still setting a foundation, like paying off debt or establishing savings practices, a financial coach may be a better fit for you. If you’ve established these practices and are looking for help investing and in long-term retirement planning, a financial advisor might better meet your needs.

Establishing your needs before scheduling calls with prospective professionals will help you objectively evaluate them without being swayed by sales tactics. As you’re evaluating professionals, be sure to ask about their credentials and pricing to ensure they fit with your budget and goals. Referrals or client testimonials are also a great way to vet if someone is a good fit with the right experience to support you.

It’s important to note that this doesn’t have to be an either or decision – there’s a place for both a coach and an advisor, depending on where you are in your journey. You may be in a place now where a coach is a good fit, but after you establish your foundation and start building wealth, you may find it’s time to partner with a financial advisor.

Habit Money has a partner network of values-aligned and certified financial coaches and advisors. If you’d like to get matched with one of our partners, schedule a session with our team or text us at (201) 389-7671.