As a financial coach, it’s strange to me that this essential service is still relatively unknown, undervalued, and misunderstood. Let’s take a peek under the hood of financial coaching.
What is financial coaching?
At its heart, financial coaching is a personalized, collaborative approach to helping individuals or families achieve their financial goals.
In the same way you might hire a piano teacher, a personal trainer, or a language tutor, ‘money coaches’ are a common, necessary, and affordable way to find financial stability and success.
We coaches typically work with clients on a wide range of financial topics, including budgeting, debt management, savings strategies, investing basics, retirement planning, and financial goal-setting.
And that just scratches the surface. It’s not uncommon for coaches to provide guidance on navigating life events such as buying a home, starting a family, changing careers and so much more.
How it works
The beauty of coaching is that sessions are completely tailored to the individual.
No two people have identical finances, living situations, dependents, careers, ambitions and so on. We therefore take great measures to help clients identify their values, priorities, and financial goals, before developing actionable plans to achieve them.
A big part of the coaching is education. Financial literacy may well be at an all-time low, thanks to (in my opinion) an inadequate education system.
So, providing said education as well as resources & tools to empower clients to take control of their finances, is key. But coaching takes it a step further to help the clients apply that knowledge.
We want you to confidently make financial decisions today, and for the rest of your life.
Financial coaching vs financial advisors
Financial coaching sits in between having no support whatsoever, and engaging with a financial advisor.
Financial advisors are generally out of reach of most people and, in our humble opinion, won’t provide nearly as much value as a financial coach.
Financial advisors tend to manage your money and investments on your behalf, for a sizeable fee. Generally, after this hefty fee is deducted, they tend to underperform.
Money coaches on the other hand provide a much more comprehensive service. We take a holistic approach to your finances, considering everything from the numbers in your accounts to your mental health and beliefs around money.
We empower you to make the best financial decisions for yourself. Whereas a financial advisor may lead you to products and services that are suboptimal (perhaps for commission) we coaches only focus on giving you the absolute best advice.
Are financial advisors, planners, and wealth managers all bad? Absolutely not. There are some fantastic ones out there (particularly those that are paid a flat fee rather than percentage of assets or commissions).
However, it is typically only the very wealthy or those with complicated financial arrangements that warrant even considering an advisor. If you are in the 99% like the rest of us, a financial coach is the way to go.
Who is financial coaching for?
A wide range of individuals can benefit from coaching.
We mention the various use cases above (debt management, budgeting etc.) but there are no restrictions on challenges we can help with. There is also no restriction on a clients age, income, literacy level – indeed anything else at all.
In fact, the ROI (return-on-investment) when it comes to coaching can be enormous for everyone. Working with our clients, we routinely see how small tweaks in behavior add up to possibly thousands of dollars saved over time.
Certainly, financial coaching is worth it for most people. That’s because most people have blind spots when it comes to their finances, no matter how financially secure they are.
There are generally always some areas for improvement. In most cases, there are areas where drastic improvement is needed.
In a perfect world, everyone would check in with a financial coach at least annually to make sure they are they not heading for a cliff with their finances. I truly believe it should be as routine as going to the dentist or visiting the doctor.
We visit the dentist to avoid expensive root canal surgery down the road – saving our money and our health. Similarly, a financial coach can save you future money pain and mental health pressure in the form of stress.
It’s an extreme comparison, but a needed one. Financial coaching can be seen as a luxury when it is far closer to a necessity.
It’s erroneously compared to the aforementioned (expensive) financial advising, which is completely different and provides much less value for the average person.
How much does financial coaching cost?
Rather than charging a percentage fee or being commission based, financial coaches generally offer much simpler fee structures. We have a full article on costs here.
Typically, there will be a flat fee for a one-off or series of coaching sessions. Some may even be a free consultation (like us!).
Typically, coaching rates are quoted to be anywhere from $100 to $300 an hour, however paying by the hour is rarely seen in my experience.
We would typically offer a package of sessions to tackle your specific challenges over a given period of time. These packages may range from a few hundred to a few thousand dollars.
When compared to the measurable value gained in the form of debt reduction, savings increases, income increases, lower taxes (and more!) a one-off series of sessions pays for itself very quickly.
I emphasize measurable as most investments in yourself do not yield a measurable financial return on investment, at least not immediately. This is one area of your life where the upfront investment pays dividends for many years to come.
How to find a financial coach
Let me first start by recommending you get in touch with us for a free consultation if you are interested in coaching.
The best coaches are ones that you feel you will get on with and have the expertise to handle your unique challenges. They are coaches that get their business through word-of-mouth, and we have had lots of happy clients.
However, if you’d prefer to look through official channels, you can search the AFCPE’s website for an accredited coach.
How to become a financial coach
You should become certified in order to offer financial coaching services.
Certification is not required to offer coaching. Indeed, certification may not even make you better as a coach.
However, our coaches are all certified. It is a checkbox and can give clients peace of mind.
The reality is that your knowledge, background, and coaching abilities are what define whether you are able to be a high-performing financial coach.
People want to feel confident in your abilities to coach them through their specific challenges. A piece of paper saying you can do that is not worth nearly as much as demonstrating your ability to do that.
Establishing your credibility as a coach and marketing yourself to find clients are the big challenges for aspiring coaches. Putting yourself out there with a website, on social media and finding referral partners are what takes the time.
