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Financial Coaching or Financial Planning?

Most consumers realize at some point in time that there are questions about money that aren’t an inherent or learned part of knowledge and skills. Unless a family member, teacher, friend, or other resource took the time and had the expertise to walk us through how to manage money day to day, many will flounder in one or more areas of personal finance throughout life.

Think about it – every moment of every day involves using financial resources. It’s a 24/7/365 reality. Whether driving down the road to work (using up auto fuel and relying on auto insurance coverage in case of an accident, not too mention a car payment), or whether at home enjoying a movie with the family (using internet to stream, electricity and eating popcorn purchased at a store), the decisions made around money affect every moment of life. Every financial interaction requires the ability to assess options, to ask good questions, to find the best resource, and to utilize many more abilities that may not come naturally. If there is no prior teaching, guidance or experience, individuals may need to look to a financial professional.

The question remains, who can best assist when the need to dive into a new kind of financial engagement arises? There are two kinds of financial professionals that you can rely upon to provide support, point to reliable resources, and offer guidance across your entire financial life.financial planning or coaching

So how does a consumer decide where to go when seeking financial guidance? For those in debt, having difficulty figuring out how to live day to day on current income, or looking for basic money management support, the assistance of a financial coach or counselor may be a good first step. For those ready to take a broader view of life and your money, including starting or enhancing your investments and savings, think about contacting a financial planner.

Financial coaches and counselors offer a variety of services and come in all types of flavors and styles. They may hang out their own shingle and work independent of other businesses, or they may work within organizations or institutions such as the following:

– non-profit credit counseling and debt repayment services

– other non-profit, non-government and community related organizations such as services for disabled, elderly, and college access groups

– credit unions

– banks and other creditor related businesses

The services offered by these groups may vary tremendously. Organizations may provide a broad array of services from basic budgeting to debt repayment and management to government supported low income tax services, student loan related services and more. Also, the approach to working with clients, often depends on the IRS status of the group (i.e. 501C-3 non-profit, private corporation, etc.) or the mission of the organization as established by leadership and boards of directors. Always research ahead of utilizing or making agreements with any of these services. The internet is full of resources that provide information to make the best choices based on your needs.

For starters, here are some questions you should ask to assure individuals are working with a trained and ethical professional or group:

1. Fiduciary – does this professional or service have a fiduciary duty to act in your best interest? Not all “financial advisors” are created equal, in fact most brokers and agents are not fiduciaries in the truest sense and only certain financial planners and coaches will be upheld to this higher standard.

2. Credentialing – does the professional or group require its employees to hold nationally recognized certification or credentialing? Groups such as the Association of Financial Counseling and Planning Education Foundation, CFP Board and National Foundation for Credit Counseling publish lists of professionals and offices that offer substantial training and national credentialing.

3. Education – does the individual or group offer financial education in addition to other services? When educational resources are provided as a value add to other services, it’s obvious the professional or group has a comprehensive and holistic approach to providing services.

4. Cost – costs may vary tremendously in these services. Be sure to inquire and research to learn if the same services are offered for less or possibly as part of a group plan through an employer. For instance, many employers offer Employee Assistance Programs that include some form of financial counseling.

Now, let’s talk about another level of support for financial decision making as serious saving and investing become the next move for individuals.planning or coaching

Financial Planners on the other hand, are investment advisers and professionals often more focused on long term investment strategies in order to reach goals related to retirement, wealth accumulation and education. Although most financial planners are fully capable of helping clients with day to day money management, it’s wise to utilize the services that they are best qualified to address, such as choosing investment and savings vehicles in order to be prepared for a child’s education or retirement planning. These professionals are most typically reimbursed for more broad life financial planning advice and services. Be sure to research and find professionals who adhere to a fiduciary standard. These professionals will always work in the best interest of the client regardless of how it affects their own interests. Here are some things a very good financial planner can do for consumers:

– Look at the big picture considering investments, insurance, tax considerations, estate planing.

– Put a comprehensive financial plan together including observations and recommendations.

– Illustrate the impact of financial decisions you are considering today and in the future.

– Implement strategies and solutions specific to a clients unique circumstances

Remember, learning along the way will empower individual consumers to make better choices and decisions over the years. An excellent financial coach or counselor will never use the word “should” or say, “you need to…”, in other words offer advice. Even though a financial planner is authorized to offer advice, those who have the client’s best interest at heart will always seek to assure that the client’s values, goals and aspirations are met above all else.

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