Financial coaching has gained popularity in recent years as more and more of us look to improve our relationship with money and our overall financial wellbeing. But what’s the difference between a financial coach and a financial advisor? And how can you work out which is best for you?
A financial advisor is someone who is regulated by the Financial Conduct Authority (the FCA) to give specific advice. This means they are legally allowed to recommend products or services for you to use based on your circumstances or what you’re hoping to achieve. In contrast, a financial coach typically is not legally allowed to provide formal financial advice and cannot recommend specific products. Instead, many financial coaches focus on working with clients to change their mindsets towards money, help them determine their financial goals and create a plan to work towards those, and, sometimes, support them with underlying emotional issues which impact their relationship with money.
Financial advisors have been around much longer than financial coaches and typically cater for wealthier clients with complex product needs. That being said, even wealthier people could still find ways to improve the way they manage their money and their attitude towards spending, and may look to a coach to do this. Prices vary depending on the individual and their experience or qualifications.
You can expect to work with an advisor to discuss a specific issue or meet every so often to check in on your financial progress, however, it’s likely that you’ll have a more hands-on relationship with a coach, as behavioural change can be a lengthier process.
If you’re looking for a financial advisor, it’s worth having a topic in mind that you’d like to discuss, as many financial advisors have a specialism that they work within. For example, mortgage brokers are a type of financial advisor (provided they’re properly authorised). You can search for local advisors online and they often offer a free initial consultation, so they can understand a bit more about your circumstances before you become a client. When reaching out, be sure to check that they’re properly qualified.
Financial coaches come in various shapes and sizes, depending on your goals or challenges. Some come from a counselling background and work to tackle the underlying issues behind problematic financial behaviour, whereas others offer more practical guidance, including frameworks and programmes to help you get your finances in shape. Companies such as Octopus and Claro work with a team of coaches, or you can also search for individuals online, a number of whom have built up their own social media following now, such as The Money Whisperer.
You can also access free financial guidance from charities such as Money Helper, so it’s worth checking out their website or even speaking to them first before reaching out to an individual or company who charges for their services.
Can work with you to improve your emotional relationship with money
Often work to help people struggling with debt, rather than clients needing to be in a more secure financial position
Not able to give recommendations for products or services
Cannot provide formal advice
Not regulated by the FCA
Able to recommend specific products or services for you to use, based on your circumstances and their knowledge of the market
Regulated advice, meaning you have certain protections and rights if the advice they offer has a negative impact on you/your finances
Rarely work with individuals to manage debt
Less likely to focus on an individual’s relationship with money from an emotional or behavioural viewpoint
Nowadays you can organise in-person sessions with either a coach or an advisor, as well as take your sessions online via a video call. The format will depend on the individual you’re working with, and you can expect to have some work to do between meetings, be it a piece of informal ‘homework’ for a coach or getting the detail of your accounts in order ready for an advisor to review.
Both types of services can offer great support if you have specific questions or problems that you want to resolve. However, given both can cost money, it’s worth considering whether there are free services available to you instead.
Similarly, think about whether the money you would pay could be used more effectively to improve your financial situation beforehand. For example, rather than paying £200 for a coaching session, could you use that money to help pay down a debt? The ilumoni app could also help you find smarter ways to repay or clear balances faster if you’d like to try and improve your situation before seeking out further financial support.
If you do choose to seek out an advisor or coach, spend some time first writing down exactly what it is you’re hoping to achieve from working with them. This will help you get the most out of the sessions and keep the time focused.
If you're concerned about your finances or are struggling with debt, the organisations on our Debt Helplines page can offer you additional support or advice.
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