What Is a Financial Coach and How to Become One
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A fitness coach can help you with your deadlifts and core strength. A life coach might tell you to work on emotional boundaries.
A financial coach wouldn’t be able to help you with strength-training guidance or bullet-journaling techniques, but they can provide you with strategies to organize your finances so you can make wise decisions in the future.
via Zoe Financial
Financial coach definition
A financial coach is a type of advisor who can help you reach your financial goals by teaching you money management skills, such as how to build savings, create a financial plan or pay down debt. A financial coach can help improve your financial literacy, but they likely cannot give you investment advice.
Financial coaches often assist their clients with the behavioral and emotional components of managing money. A coach can help you unearth what drives your financial decisions, so you can create a healthier attitude that leads to better money habits.
What does a financial coach do?
Financial coaches typically meet with their clients on an ongoing basis to work toward a specific financial goal. Before you enter into a relationship with a financial coach, identify what area of your financial life you would like assistance with. For example, if you struggle with spending, your coach may have you outline your financial goals and track your expenses for a few weeks to identify patterns and areas for improvement.
A financial coach can help you:
Understand your spending habits.
Create a budget.
Outline a financial plan.
Understand the emotional components of dealing with money.
Learn how to establish an emergency fund.
Manage debt.
If you’re looking for investment recommendations or management, a financial coach likely won’t be able to help you. In that case, it may be best to look for a robo-advisor or a financial advisor.
» Want to learn more? Read about how to choose a financial advisor
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How do I find a financial coach?
While there is no required coursework or license, and there are no certifications to become a financial coach, there are training programs run by the Association for Financial Counseling and Planning Education. If you’re looking for a financial counselor or coach, finding a professional who holds either the AFCPE’s Accredited Financial Counselor or Financial Fitness Coach designation can ensure you work with an experienced and certified individual. You can find a coach through the AFCPE’s website. Some robo-advisors (online services that manage your investments for you) also offer access to financial coaches or advisors who can help you with various financial issues.
» Curious about robos? Learn about robo-advisors.
How much does a financial coach cost?
Financial coaches typically work on a fee-only basis. Some charge based on how long you plan to work together (for example, a set fee for a period of six months) or per individual session, while others charge based on a percentage of income. Since financial coaches do not usually handle a client’s investments, they typically do not charge based on assets under management, which is a common fee model among financial advisors.
Some financial coaching packages can cost thousands of dollars a year. Coaching rates are typically between $100 to $300 an hour. Because of the wide range of fees charged by coaches, it’s important to ask about expected costs upfront.
What’s the difference between a financial advisor and a financial coach?
Financial coaches, like most types of advisors, do not have a mandatory level of training or certification. Unlike financial advisors, financial coaches rarely give investment advice (and if they do, they must be registered as an investment advisor). Financial advisors can be considered a step up from a financial coach: Once you master the topics a coach can help you with, such as budgeting, creating an emergency fund and paying down debt, you may be able to start accumulating assets. A financial advisor can help you create a financial plan or build an investment portfolio to manage those assets.
» Want to know more? Read about the different types of financial advisors
How do I become a financial coach?
1. Get certified
Even though you do not need to complete any coursework or earn a license or certification to become a financial coach, you shouldn’t forgo a financial education before you start teaching others. Earning one of the AFCPE’s designations can give you the foundational knowledge to become a financial coach.
2. Leverage your personal experience
Financial coaches can specialize in niche areas: Some work specifically with immigrants, the LGBTQ+ community or particular age demographics. Financial coaches can also utilize the tools of a financial therapist to help people with negative emotions around money. Think about what you can offer people as a coach and what makes your product special.
3. Market yourself
Financial expertise doesn't hide behind large desks and mahogany paneling anymore. If you're starting out as a financial coach, leverage social media such as Instagram or TikTok to help build your platform, and create a website that spells out how you can help people with their money.
4. Figure out what to charge
A financial coach’s salary depends on their fees, how many clients they serve and whether or not they run their own practice or work for an existing firm. If you're wondering whether earning a certification is worth it, job sites Glassdoor, Comparably and Payscale show that the common salaries for financial coaches tend to fall between $40,000 and $45,000 a year.
Bottom line: Is hiring a financial coach worth it?
Like most other financial decisions, it really depends on your individual circumstances. If you're someone who feels that your emotional or behavioral relationship with money is in need of some repair, a financial coach could help you to establish better habits while working toward your future money goals. Likewise, if you're not ready to upgrade to a financial advisor but want some help mastering the basics of budgeting or money management, a good coach could support you on the road to building financial confidence. If you're on the fence, or prefer a DIY approach, there are also plenty of resources that offer free or affordable financial advice.
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