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What is the difference between a Financial Adviser and a Money Coach?

Sorting out finances can be challenging, especially when knowledge is limited. Have you ever thought about how you could improve your financial situation with an expert in your corner?

March 29, 2020

Sorting out finances can be challenging, especially when knowledge is limited.

Have you ever thought about how you could improve your financial situation with an expert in your corner? However you’re unsure which one you need?

Both financial advisers and money coaches are experts in helping you improve your finances,but their approaches are quite different.  You could best describe it as a financial adviser works on the outside (external) factors of your finances,while a money coach starts working with you on the inside (internal mindset) of your money relationship.

The straightforward breakdown between a financial advisor and a money coach is:

financial adviser focuses on your investments, debts, income and expenses and provides strategic, investment and insurance product advice in these areas. You can outsource the management, advice and control of your assets and they can manage the money you have available for wealth creation.

money coach does not manage your investments for you, nor can they give you specific investment financial product advice. Instead, they focus on transforming your money mindset, behaviours, unconscious patterns, actions and financial results. They do this through examining your ‘financial story’ and childhood conditioning,empowerment and financial education so you can build the skills you need to manage your own money.  

Let’s delve further into the difference between a financial adviser and a money coach.

Financial Adviser

To put in basic terms,a financial adviser will give you the information they deem necessary to your situation, to assist you make financial decisions. When working with a financial adviser, it’s best to have a good understanding and basic knowledge about money and investing. They will definitely have a more analytical and strategic approach with their work.

When should you use a financial adviser?

  • you are looking for specific fund/investment/insurance recommendations
  • you need information and advice about switching or consolidating superannuation funds
  • you want to invest your savings and need help selecting the right investment
  • you’re looking for a  life insurance policy 
  • you’re nearing retirement and need help planning for it
  • you want to set up a SMSF (Self Managed Super Fund)
  • you want to create a long term financial plan

A financial adviser generally charges an upfront plan and implementation fee and then an annual ongoing advice fee to manage your investments.This can either be a percentage of the investments they provide advice on or a flat dollar amount, which you can negotiate with your adviser.

Money Coach

Money coaches look at the behavioural side of things when it comes to people and their relationship with money.

A money coach starts not with your income and assets but with you – your values, your financial patterns,your goals, your desired future. A money coach can help you:

  • uncover the deep-seated money blocks that are subconsciously holding you back, personally and financially
  • learn steps and strategies that leverage your strengths and build your financial knowledge and confidence
  • hold you accountable over a period of time working together and help you make shifts in your behaviour
  • develop financial and emotional strategies that create long-lasting change and maximise your financial potential and outcome

Having a money coach is great when you want to understand why you do what you do (or don’t do) with your money, or if you feel stuck in a financial position.

When should you use a financial coach?

  • if you want to become financially empowered by building your financial knowledge and personal power
  • to create a budget,manage cash flow, optimise your savings
  • when you want to improve your relationship with money
  • when you feel overwhelmed with your current financial situation and need someone to give you more clarity and confidence to manage your own money

Financial coaches typically charge you by the hour, or for a package of coaching sessions. 

The Best of Both Worlds

Often a money coach and financial adviser can work together to help individuals as their skills can complement each other.  For example, a couple may see a financial adviser and only one of the couple are fully engaged with the finances. The non-engaged partner could work one-on-one with a money coach to uncover the reasons they’re not interested in finances, work on gaining more knowledge and confidence and then return to the financial adviser with a better understanding of their relationship with money and financial knowledge.

If you’re looking at utilising both a financial adviser and financial coach, you should consider seeing a coach first. They can help turn your mindset into a positive one as well as educate you so you’re ready to understand financial concepts and will be better engaged once you work with a financial adviser.

Money coaching isn’t regulated in Australia like financial advisers are, so it’s important you do your research when selecting a money coach to ensure they have specific training, education and experience to be able to assist you. Ideally, they will have formal qualifications in Money Coaching, as it is a specialised area of advice.


Warmest,

Karen Eley is a financial coach with more than 20 years’ experience as a financial adviser. Through her business, Women Talking Finance, she helps women to be confident and knowledgeable about all things finance. Karen translates complex financial concepts into simple digestible ideas.

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