The Differences between a Financial Coach, Investment Advisor, and Certified Financial Planner

The Differences between a Financial Coach, Investment Advisor, and Certified Financial Planner

January 31, 2021

The Differences between a Financial Coach, Investment Advisor, and Certified Financial Planner

Are you looking for a financial coach? Not sure if you really need a financial advisor rather than a coach? What about your investments? Should you be looking for an investment advisor?


If you’re not sure what all these terms mean, you’re not alone. Many people are confused  about the differences between various financial professionals. In this blog post we are going to look at what each type of professional can do for you.


What is a Financial Coach?

 Financial coaching means providing regular one-on-one sessions with clients in order to ‘coach’ performance improvements to meet goals mutually set by the coach and client. Coaching is differentiated from counseling in that coaches are not Investment advisors but instead they provide encouragement and monitoring over advice and do so in a process largely driven by the client. Coaching is well suited to asset building programs because clients often need encouragement and support to improve positive financial behaviors.  A coach can provide a much-needed boost to self-discipline along with the flexibility to change strategies as the client’s financial situation changes. (Investopedia) Coaching may include aspects of financial education, it is not designed to convey technical information.

 There are programs in existence which primarily deliver education, coaching, mentoring or other forms of services where the service is still described as financial coaching. While a coach may have financial expertise or training, a good financial coach is above all a coach—someone who listens, asks informed questions, and helps clients refine their own goals, objectives, and strategies. A coach also holds clients accountable for their intended goals, providing a sounding board. The process of setting, revising, and achieving financial goals can be an important step for changing financial behaviors. Goal setting requires a diagnosis of the current situation, a review of potential alternatives and choices about where to invest limited time and energy. But setting goals alone is not enough, as anyone who has attempted to keep a New Year’s resolution can corroborate. The real value of the coach comes in helping people to achieve their goals, despite all too human procrastination and failures of self-control. Roles of Coaches: Coaches play four roles: facilitate realistic goals, enhance accountability, opportunities for practice and  provides and instill hope.

 The Training from many Coach Training programs i.e. (Ramsey Financial Coaching)

  1. Focuses on improving long-term financial behavior.
  2. Facilitates clients to set and achieve financial goals largely on their own.
  3. Helps clients practice new behaviors and monitors those behaviors over time; and
  4. Targets clients with a minimum level of financial skills and experience.

 Goals of Coaching:

  • Achieve client-defined goals
  • Address immediate issues
  • Support specific actions to meet goals
  • Improve financial situations
  • Change financial behaviors
  • Facilitate decision-making
  • Provide tools, resources, and referrals

 Coaching Activities:

  • Alliance with client
  • Set goals
  • Develop action plan
  • Identify resources, tools, and services
  • Monitor client progress
  • Make referrals as needed

 Financial Advisor vs Financial planner

Consumers are presented with a broad spectrum of financial professionals, all of whom may be competing for their business. 'Financial advisor' and 'financial planner' are popular titles for individuals who help the consumer manage their money.

Every financial planner is also a type of financial advisor, but every financial advisor is not necessarily a financial planner. NAPFA, the National Association of Personal Financial Advisors, claims there are more than 100 certifications available that a financial advisor might attain.

Main issues:

  • A financial planner is a professional who helps companies and individuals create a program to meet long-term financial goals.
  • Financial advisor is a broader term for those who helps manage your money including investments and other accounts.
  • Given the proliferation of the financial industry today, many planners and advisors may actually do the same thing - so do your homework before hiring somebody to guide you.

 Financial Planner vs. Financial Advisor: An Overview

 In most cases, a consumer who seeks help managing their money will receive that help from a financial advisor of some sort.

When choosing a financial planner, it's important to understand the financial planning landscape. According to the Financial Industry Regulatory Authority (FINRA), almost anyone can claim to be a financial planner and might come from many different backgrounds. Financial planners might be brokers or investment advisers, insurance agents, practicing accountants, or individuals with no financial credentials. That is why the consumer must perform his or her due diligence before turning their money over to any sort of financial advisor. Here are some differences between the two terms. 

Certified Financial Planner

The financial planner is one type of financial advisor, who helps companies and individuals create a program to meet long-term financial goals. They have a fiduciary responsibility to their clients.

The planner might have a specialty in investments, taxes, retirement, and/or estate planning. Further, the financial planner may hold various licenses or designations, such as Certified Financial Planner (CFP), Chartered Financial Analyst (CFA), Chartered Financial Consultant (ChFC), or Certified Investment Management Analyst (CIMA),  Enrolled Agent (EA) among others. To obtain each of these licensures, the financial planner must complete a different set of education, examination, and work history requirements. 

According to FINRA, almost anyone can call him or herself a financial planner and might come from many different types of backgrounds. 

Financial Advisor

This is a broad term for a professional who helps manage your money. You pay the advisor, and in exchange, they help with any number of money-related tasks. A Registered financial advisor might help manage investments, broker the sale and purchase of stocks and funds, or create a comprehensive estate and tax plan. If the advisor is working with the public, they must hold a Series 65 license. In addition to that license, there are many other financial advisors credentials the advisor might hold, depending upon the services that are provided.

Financial advisor as a general term includes subsets of the financial advisor group, such as stockbrokers, insurance agents, money managers, estate planners, bankers, and more.

Before hiring a planner to help with your finances, make sure to understand what you are paying for. Question the planner about his or her specific training and qualifications, fee structure, and services the professional will provide.

Be aware that under the Department of Labor's new fiduciary rule, all professionals who give retirement planning advice or who create retirement plans are held to a certain legal and ethical standard.

 Final thoughts

While there are many designations and credentials that finance professionals can obtain, the main point for the consumer is to decide what you want your advisor/coach to do for you and then proceed accordingly.

 Book a Call today and let’s discuss your options.

About the Author:

Lillian Meyers CFP®, CDFA®, EA is a financial planner in Sonoma, California helping clients with wealth events, planning for retirement, loss of a spouse or divorce. She has decades of experience assisting clients in living their best retirement life through the use of financial planning, investment management, and other sophisticated financial options.