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Financial Coach, Advisor or Planner?

Updated: Feb 20, 2022

Financial Coaches help clients with decision making around a broad set of financial issues . A financial coach's work will include addressing behaviors and habits around money and the coach will typically meet with their client on an ongoing basis to try to change negative behavior and habits - similar to the approach of a personal trainer. The coach will typically refer clients to specialists in areas like taxes, insurance, estate planning, investments and wealth-building. The most common fee structure for a financial coach is a retainer or hourly rate billings.

Financial Advisors help clients with investing their assets and wealth-building. This service is much more transaction or product-focused. Financial professionals at large brokerage houses, such as Morgan Stanley, Goldman Sachs, and UBS are examples of firms that employ large numbers of Financial Advisors. There are also many advisors that operate as independents, affiliating through registered investment firms like LPL Financial. Advisors manage your investments for a fee plus typically commissions on product sales. They may meet with you and answer financial questions, but their relationship is primarily focused on your investment portfolio, and specifically, the assets they manage.

Financial Planners help clients analyze their entire financial life across cash and debt management, insurance, investments, tax, and estate planning. Financial planning typically differs from coaching and advising in that a disciplined process is followed to define goals, gather client information, develop a financial plan and monitor performance. There is variability in how these professionals charge for their services, which can include fees based on a percentage of assets under management , fixed fees, hourly rate billings, and in some cases, commissions from product sales.

Credentialing: There is a wide range of professional credentials available to financial providers.

Financial advisors are required under the investment under the Investment Advisers Act of 1940 to be licensed to give investment advice for compensation and sell investment products. The Series 7 license is the most common credential as it allows an advisor to sell nearly every type of investment product. A Series 7 licensee may sell stocks, bonds, options, futures, and packaged securities. The only securities the Series 7 does not cover are commodities, real estate and life insurance, all of which have their own licenses.

States also require the Series 65 but only for financial advisors compensated with fees as opposed to commission

Financial Planners and Coaches are not required to obtain credentialing in order to provide their services (as long as they are not selling investment products). It is common for providers to obtain specialized credentialing in these disciplines, with the CFP (certified financial planner) designation being most prevalent.

Experience & Integrity Trumps All

Credentials certainly establish a financial provider as having sufficient subject matter knowledge and the legal ability to provide requisite services. Experience and Integrity; however, are still the most important factors to consider when choosing the right financial professional.

In my experience, the role of financial advisor often makes it hard to serve clients objectively since they get paid on the products they sell. Also, it is quite common for financial advisors to not be subject matter experts in the products they sell, rather they function as a sales extension of the investment firms they represent. I typically recommend financial advisors that are independent from large brokerage houses because of this reason.

Monroe Professional Services

Monroe Professional Services considers the financial planning and coaching roles to be the most critical. Good providers help clients establish good behaviors and habits around finances, including the development of a financial plan and a process for developing and measuring performance. Regardless of designation, a client needs a partner with broad financial and life experience to help guide them.

MPS combines the coach and planner roles to provide clients with the best experience and unbiased guidance. We charge either a retainer or hourly fees for the time we spend with our client, deliverables we create, and do not sell investment products. We recommend investment advisors or other financial specialists that we think can support components of the plan we create and monitor. By not making money of selling products, this allows us to truly function without bias and provide the best coaching and planning services possible.

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