Financial coach vs. financial advisor: what’s the difference?

What a financial coach does

Financial coaching is about the money decisions you make every week. A coach helps you see where your money is going, build a realistic spending plan, decide which debts to pay first, and set savings goals you can keep. Just as important, a coach checks in as you put the plan into practice and helps you adjust when life changes.

• Reviewing your recent spending and statements
• Building a monthly spending plan
• Prioritizing debt repayment
• Setting and funding savings goals, including for irregular yearly bills
• Accountability and regular check-ins

Coaches typically don’t recommend specific investments, sell insurance or other financial products, or prepare taxes. “Financial coach” is also not a licensed title, so it’s worth asking about a coach’s background. Some hold a coaching certification, such as the Accredited Financial Counselor® (AFC®) designation. Others bring a professional license from a related field; I’m a CPA.

What a financial advisor does

“Financial advisor” is a broad label. It can describe people who manage investment portfolios, plan for retirement, recommend insurance or annuities, or sell investment products. What they’re allowed to do, and the standard they’re held to, depends on how they’re registered:

• Investment advisers register with the U.S. Securities and Exchange Commission (SEC) or their state and owe their clients a fiduciary duty, meaning they must act in the client’s best interest.
• Brokers, the registered representatives of broker-dealers, are overseen by FINRA. When they recommend investments to retail customers, they must follow the SEC’s Regulation Best Interest.
• CFP® professionals commit to the CFP Board’s Code of Ethics and Standards of Conduct, which requires them to act as fiduciaries when they provide financial advice.

Advisors are most helpful when you have money to invest and decisions about how to invest it: choosing accounts and investments, planning retirement income, or coordinating a complex financial picture.

How each is usually paid

Pricing is one of the clearest differences.

• Financial coaches commonly charge flat fees: a single session, a package, or a monthly fee for ongoing support. Because coaching doesn’t involve selling products, the fee is usually the whole cost.
• Financial advisors may charge a percentage of the assets they manage, a flat or hourly planning fee, commissions on products they sell, or a combination.

Whoever you hire, ask exactly how they’re paid. It tells you a lot about their incentives. For a closer look at coaching prices, read how much a financial coach costs.

Side by side

Which one do you need?

Start with what’s actually standing in your way.

A coach is likely a good fit if…

• You earn a good income but aren’t sure where it goes each month.
• You’re carrying credit card or loan balances you expected to be gone by now.
• You want to save consistently, but it never seems to stick.
• You and a partner want to get on the same page about money.
• You’d value a written plan and someone to check in with as you follow it.

An advisor is likely a good fit if…

• You already have a steady surplus and savings to invest.
• You need help choosing investments, rolling over a retirement account, or planning retirement income.
• Your situation involves complex investment, insurance, or estate decisions.

Many people benefit from both, in that order. Coaching helps you build the steady monthly surplus that makes investing possible; an advisor can then help you decide where that surplus should go.

Questions to ask before you hire anyone

• How are you paid, and what will working together cost in total?
• Do you sell financial products or earn commissions?
• Are you a fiduciary for the advice you give me?
• What credentials or registrations do you hold, and can I verify them?
• What exactly will we do together, and what will I have at the end?

You can look up investment advisers in the SEC’s Investment Adviser Public Disclosure database, brokers on FINRA BrokerCheck, and CFP® professionals on the CFP Board’s verification page.

Where Convivial Wealth fits

I’m Brenna, a CPA and financial coach. My coaching focuses on the everyday side of money: understanding your spending, building a realistic plan for debt and savings, and following through. It’s financial education and coaching, so it doesn’t include investment, tax, or legal advice. If your questions call for that kind of advice, that’s a sign to work with a professional who provides it, and a clear coaching plan can make those conversations more productive.

See how coaching works and what it costs.