You’ve probably heard the different terms describing financial planners and what they can do to secure your financial future. The question is: did you know that there is a vast difference between a financial advisor and a financial coach?
From a bare-bones definition standpoint, a financial advisor is “a professional who renders financial services to individuals,” whereas financial coaching is “a future-focused practice with the aim of helping clients determine and achieve personal goals.” In other words, a financial advisor lends his hand in managing the wealth that you’ve already built; a financial coach helps you build that wealth from the get-go.
Consider this simple analogy: would you rather go to a greenhouse and buy a plant? Or go to a greenhouse, buy the seeds, learn how to nurture them and watch them grow? Financial coaching gives you the tools and knowledge necessary to take those seeds home with you, plant them, and cultivate a bountiful garden.
First and foremost, it is important to point out that each and every individual is different – different goals, different savings plans, and different incomes. Maybe you already have an impressive “garden”, and are looking for financial advice on investments and portfolio options. Financial advisors manage the money you already have – you give them complete control of your assets and they do all the work. While this model works great for some people, it’s not ideal for others.
Wealth coaching focuses on YOU. It makes you a major actor in your financial building process. Wealth coaches are educators and mentors that give you the unique tools and strategies necessary for financial freedom. Why put your financial future in the hands of someone else when you could learn and build your financial path through a dynamic relationship where the goal is your financial success?
Here’s a breakdown of the major differences between financial advice and financial coaching.
- Follows the advisor’s agenda
- Similar plans, strategies and portfolios among different clients
- Advisor is authority
- Relationship creates dependence
- Advisor is accountable and responsible
- Advisor is directing the process
- Focuses on financial product and sales
- Goal is to create a portfolio for a dependent client
- Advisor is paid for portfolio advice and transactions
- Advisor imposes his values, skills, and knowledge on the client
- Follows the client’s agenda
Unique strategies, plans and portfolios for each client
Client becomes expert and authority
Dynamic relationship creates independence
Client is accountable and responsible
Posting questions and educating
Focuses on learning and growth of client
Goal is to create a fully functional, educated, independent client
Paid for eliciting, educating, expanding, and supporting client’s whole financial success
Draws out client’s values, skills, and knowledge
As you can see, there are pros and cons to each financial planning business model. It all depends on where you are in your financial planning process. The benefits of having a financial coach in your corner are endless: take control of your finances and learn how to harvest a secure and protected financial garden. Or, buy the plants and enlist the help and advice of a certified gardener to be the expert and authority in your financial future. Regardless of your financial position, it is crucial to understand the importance of a second pair of educated eyes looking at your fiscal circumstances.