If you’re like the majority of people looking for financial help, it’s likely that you are totally confused and overwhelmed with the many different types of financial professionals.
Financial Advisors, Coaches, Planners, what’s the difference?
Let’s start with the basics:
There are 3 major types of financial professionals:
Just to make it a little more confusing, I’m going to add a subcategory as well:
Financial Advisors are probably what you think of first when you think of financial professionals. Advisors are, just that, someone who gives you financial advice.
Advisors can aid in a lot of different things, like investments, estates, insurances (just to name a few!)
The big difference between a financial advisor and a financial coach is that financial advisors deal with ‘financial products’ whereas coaches do not.
Financial Planners are sort of a sub-set of Financial Advisors. Planners can do all of the things that advisors do, but they’re more likely to provide a more comprehensive ‘plan’.
Whereas someone calling themselves an ‘advisor’ would probably just have a specific product that they work with, someone calling themselves a ‘planner’ would usually take a look at your overall financial life and, given ALL variables, create a projection for you to reach whatever goal you wanted to.
All this said, it really does depend on the individual professional.
This is where it gets a little confusing, in Canada (and in the states) there isn’t really a ‘rule’ or ‘regulation’ on who can call themselves a ‘planner’ and who can call themselves an ‘advisor’.
That means there are many advisors that do planning, and there are many planners that work with specific products.
Here’s a link to the Canadian Financial Consumers Website, where you can find information on the regulation requirements in Canada.
Here’s a link to the United States Department of Labor Website, which is where you can find the regulation requirements in the US.
It’s up to you as the client to ask questions. Any good financial professional should be able to sit down with you and explain exactly what they do, why it should matter to you and how it fits in with YOUR life.
Financial Planner Certification:
There are however some common certifications for financial planners.
The most common, is a Certified Financial Planner or CFP, that means that they’ve been specifically educated in widely accepted financial strategies and plans.
It doesn’t mean that someone not using that term, or someone calling themselves just an advisor is NOT educated in financial strategy, but ‘Certified’ Financial Planner is sort of a more widely recognized term that encompasses a certain level of skills. But again, none of these ‘titles’ are actually regulated so people can call themselves whatever they want to.
In Canada, you can visit the Investment Industry Regulatory Organization of Canada to learn more about the different certifications/education programs/trainings (there is a helpful glossary on this page where you can scroll through a lot of the programs to see if your advisor’s training is listed!)
For the US, you can visit the United States Department of Labour.
Accountants & Bookkeepers
Accountants and Bookkeepers are pretty different than Advisors and Planners.
HOWEVER, the reason I mention them, is a lot of people will say ‘I have an accountant, I don’t need an advisor’ and I want to be sure that I explain the difference here! (There is also some confusion on what the difference is between a bookkeeper and an accountant so I want to clear that up as well.)
Accountants help you with taxes. They can do your yearly returns, or work with businesses to manage their ongoing tax needs, ie. quarterly remittances, payroll, etc.
Bookkeepers take care of the books! They’re mostly used for business needs. They basically are organizing all of the invoices and expenses used by the business into something that the accountants can use for their work.
Neither of these professionals will help you invest, plan for retirement, or get you insurance coverage. (So yes, even if you have an accountant or bookkeeper, you should also be looking into those other professionals!)
Now, finally, let’s talk about Financial Coaching!
Financial Coaches as I mentioned, is a relatively new field. We don’t sell products, insurance, or investments and we don’t deal with taxes.
Financial coaches work with their clients to build their money management skills.
This can include building savings, or getting out of debt, or understanding how to manage and balance all of your expenses with the lifestyle you want to have.
A financial coach will work with you in depth, on figuring out which expenses are working, which aren’t and why, they can also help with emotional or behavioural issues, ie. helping with money mindset blocks, or changing spending habits.
Within coaching of course, there are many different types of professionals that will help with different ‘niches’. There are some coaches that work only with say, divorced moms, and they’ll help navigate all of the monetary details that come with the transition out of married life. Or, there could be coaches that only work with mindset issues, so for example if you are too good at saving money (yes, that happens!) and it comes as a detriment to living the life you want, then they’ll help you work through what’s going on. There are coaches that work with people preparing for retirement, or people who have just graduated, there are literally endless amounts of coaching subjects because EVERYTHING in life revolves around money!
Myself, I like to work with younger professionals, someone just entering the world of personal finance who’s pretty confused about the whole ‘how to financially adult’ thing. I like being the bridge between what we SHOULD have been taught in school, and ‘financial success’.
I also really enjoy working with managing day to day money (or ‘cash flow’ as it’s called in the biz). Like a Marie Kondo of finance, I love seeing messy expenses so I can help organize them!
Who should I hire?
All of this said, who the heck should you hire?
If you have a good handle on your day-to-day money management you’ll be looking to hire a Financial Advisor, or a Planner. Of course, as I just mentioned, there are a lot of different subsets of those professions, so do your research on which one you think you’d need and ask a LOT of questions!
If you run a business, or are looking to do a tax return, you’ll be looking for an Accountant or a Bookkeeper.
If you are living paycheque to paycheque, in a lot of debt, or having some emotional blocks around money, you’re really looking for some extra accountability, and that’s the job of a Financial Coach (sometimes also called a Money Coach).
Ideally, all of these professionals play a role in your financial health. It’s like working on a healthy body, you need a trainer to teach you how to work out, you need a dietitian to help you understand what foods to eat, and you can have a health coach or therapist to help you with the emotional blocks of body image. All of the financial professionals play an important role in your financial wellbeing!
So, how are you going to build your financial team? Which professional do you need the most? Let me know in the comments down below!
Have more questions? Or, think you’d like to work with a financial coach? Send me an email at: email@example.com