Ki Financial, LLC
Published Sep 22, 2022
Many confuse the two fields, but there are big differences between a financial coach and a financial advisor.
Let’s start by breaking down the words themselves.
According to Dictionary.com:
a coach is a tutor who gives private or specialized education.
an advisor is a person who gives advice in a particular field.
Now add the financial onto the terms and this is what you get.
From Dictionary.com: a Financial Advisor is a person who is employed to provide financial services or guidance to clients.
(Dictionary.com does not have a definition for Financial Coach.)
Investopedia.com defines a financial coach as: someone who offers motivation and information to help others with money-related issues.
In the financial world, they are defined as follows. A financial coach works with clients to improve their financial situation and to understand finances, whereas a financial advisor presents concepts and financial ideas. How they do that can vary from coach to coach and from advisor to advisor. A lot of financial coaches work towards healing and a healthy relationship with money. They work with clients to pay down debt, develop spending plans, improve credit scores, and change negative habits towards money. Some even dive deeper into financial counseling to uncover blocks and traumas impacting overall financial health.
A financial advisor can provide more in-depth suggestions for financial products and resources. Mainly they work with clients on long-term financial planning, such as saving for retirement, investing, and reaching financial goals. Financial advisors need to be licensed and registered with the Financial Industry Regulatory Authority (FINRA), which is earned by passing a series of exams.
Most financial advisors do not work with clients who are having financial challenges. This is where financial coaches can come into to help prepare someone before they are ready to work with a financial advisor.
Financial coaches do not have to be licensed or have any specific degree, which is why it is incredibly important that a person research their financial coach prospects thoroughly to understand their level of experience and how they practice coaching. There are other accreditations like Certified Financial Planner (CFP) and Accredited Financial Counselor (AFC), both of which require the financial professional to take courses and pass exams. The AFC also requires professionals to have over 1000 hours of experience working with clients to earn this designation.
Are there some financial professionals that are both a financial coach and advisor? YES, but not many. Both professions required extensive experience in order to be proficient. The benefit for clients who work with a financial professional who is a coach and advisor is that they do not have to be transferred over to someone new when they are ready to plan for their financial future. Once the relationship is built, it can continue on. For some, this might not necessarily matter, but for others it can create less stress and help them continue in this health financial path.
Deanna O'Neal, AFC®
As an Accredited Financial Counselor working in the financial education field for the last 20 years, Deanna brings a wealth of ideas, information, and color into the financial sphere. She is the owner of Ki Financial, LLC and currently works as a financial coach and advisor for small business and individuals looking to improve their financial wellness.