What’s the difference?
I’ve gotten this question a few times now, what is the difference between a financial advisor and a money coach? My best guess as to why I’ve seen this question pop up more and more is the increased presence of money coaches on social media. I’ve noticed this as well. Some money coaches are side hustlers really interested in personal finance and sharing their stories and others are full-time money coaches with a niche clientele. They offer an abundance of tips on money mindset and personal finance best practices and offer 1 on 1 consulting with clients.
Truth be told, I enjoy following money coaches, as well, on social media. Personal finance isn’t the most exotic career and can be hard to create interest and engagement around the topic but many of the money coaches I follow do an incredible job of this seemingly impossible task! I look to them for inspiration and a fresh perspective on how to address and communicate seemingly boring and overwhelming topics like cash flow management (a.k.a budgeting), student loan repayment and retirement savings.
I can see why this is a common question. It took me a minute to think of the proper response the first time this came across in a conversation. I then thought on it some more and decided to create a whole post dedicated to this exact subject. Well kind of…
Not being a money coach, I don’t want to make general assumptions about backgrounds and the path that led into the industry; so instead, I’m going to focus on what I know and that is the role of a financial advisor.
Education & Background
Last year, I shared my personal story that led me to what I call the “personal finance” industry. I am proud to call myself a second-generation financial advisor. My father is also a financial advisor which allowed me to witness, first hand and at an early age, how being a steward of your finances can positively impact a family. Wanting to follow in his footsteps, I went to school to study finance with a minor in financial planning. After graduation, I continued to take courses to sit for the CERTIFIED FINANCIAL PLANNER™ certification, a grueling two-day test. I still remember the day I got news of passing the CFP®, I ran down the hall to my father’s office shaking uncontrollably and with tears of joy welling.
It was another two years until I could formally hold myself out as a CERTIFIED FINANCIAL PLANNER™ professional. A component of the certification is not just having the smarts to pass the test but to also accumulate 6,000 hours of professional industry experience before those three sacred letters could be added after your name. It’s also required to meet 30 hours of continuing education every two years with a two-hour ethics requirement.
This spring, I will have been in the industry eight years as a full-time professional with a total 10 years’ experience if you include my internship experience. Suffice it to say, I’ve been living and breathing the personal finance industry the last 10 years of my life. I love my job and have such a passion for this industry and working with young professionals and families to achieve financial goals.
Day-to-Day
Did I mention that being a financial advisor is my full-time job?
Full time, I am a financial advisor for Savant Wealth Management a Registered Investment Advisor headquartered in Rockford, Illinois. I am a fiduciary for my clients and work with them to define financial goals and put into practice strategies to help move them towards their financial goals. Being a fiduciary means that I hold my clients interests above my own. Every recommendation I make, investment or otherwise, is done in my client’s best interest.
I created The Financial Fashion Planner blog over two years ago as a hobby. As an advisor on the younger end of the age spectrum, I have a passion of working with client that are in my demographic. The blog was a place for me to answer the financial questions I get from friends on a broader platform. It was also a creative outlet where I could share my work style (I miss working from the office!) and design aesthetic. These days the blog has been more focused on personal finance, but I hope to get back into the fashion and design side of things when getting dressed up becomes normal again.
All-in-all, the Financial Fashion Planner is a passion project that I work on after my workday wraps up and on my days off. It’s been such a wonderful journey and am excited to see where it takes me in the new year!
Services
The list of services provided by my firm could be another blog post within itself. What I will say here is that we view there to be 10 key areas of financial planning and we work with our clients to address all ten if applicable to their household. I’ll share the 10 key areas below:
- Health & Wellness
- Retirement Planning
- Risk Management & Asset Protection
- Debt Management
- Education Planning
- Income Tax Planning
- Investment Planning
- Estate Planning & Administration
- Business Planning & Succession
- Charitable Planning
I’ll highlight here one of the biggest differentiators between a financial advisor and money coach and that is the investment management component. From my research, I’ve found this is often where money coaches draw the line. They will offer some ideas or strategies around investments but do not actually manage their client’s investments. On the financial advisor side, we manage our client’s assets which means we have discretion over their investment accounts (custodied at a broker dealer like Charles Schwab, Fidelity, TD Ameritrade, etc.) and actively manage their portfolios. By actively manage, I do not mean actively trade. By actively manage, I mean actively oversee our clients’ accounts daily, trade when new contributions are made, or distributions are needed and make other proactive moves like rebalance and tax loss harvest when needed on their behalf.
Some folks want to manage their investments on their own and others would rather delegate that responsibility to a professional, so they can focus on the things they enjoy. At the other end of that spectrum is the investment DIYer that enjoys researching investment managers, looking for trends in the investment space and enjoys the process of overseeing and managing their investment portfolios.
Which to Choose?
There are many factors that should be considered when choosing who to partner with on personal finances. If you are picking between a financial advisor and a money coach, it’s important to do some research and understand the scope of services to ensure they are in alignment with what you are looking for. For some folks, they aren’t quite ready to become an investor so having a financial advisor to be their investment advocate might not make sense.
As part of the research component, it’s important to ask questions to better understand how both professionals are compensated and future meeting expectations. Looking for a list of questions to help guide these conversations? I’d invite you to read this post from last year with a list of questions for a financial advisor. Finally, you want to make sure there is a good personality fit between you and your financial professional. Take the time to schedule an introduction call to get a better sense of their personality and how they interact with clients.
At the end of the day, the most important thing is that you find a personal finance resource that is encouraging and will be there as a resource as you walk your path towards financial freedom.
Savant Wealth Management (“Savant”) is an SEC registered investment adviser headquartered in Rockford, Illinois. Past performance is no guarantee of future results. See Important Disclosures here.
Certified Financial Planner Board of Standards Inc. (CFP Board) owns the certification marks CFP® and CERTIFIED FINANCIAL PLANNER™ in the U.S., which it authorizes use of by individuals who successfully complete CFP Board’s initial and ongoing certification requirements
