How Can A Financial Professional Help Me With Money?

Maybe you need someone who can recommend and sell financial products. Maybe you’re thinking of filing for bankruptcy. There are many financial professionals out there and it can be difficult to choose the best one for your needs. First, we’ll start with what a money coach does because after all, I’m a money coach, and I can tell you if you need one! Then we’ll cover other common financial professions. These include financial counselor, financial therapist, financial advisor and financial planner.

All but one of these professions is unregulated. This means that there’s no governmental organization that requires licensing or oversight. Money coaching and financial advising are broad terms. For example, I could call myself a financial advisor but I believe it would mislead clients. Financial advisors in certain capacities hold securities licenses and are known to recommend and sell financial products. I don’t sell or recommend investments.

Although there’s no regulation, there are accreditation organizations for financial counseling, financial therapy and financial planners that hold people to a code of conduct or ethics. The training and exams are thorough, and take care that people in those professions are held to a high standard. In fact, we’re held to a fiduciary standard. This means that although I’m a money coach, I put my clients’ best interests before my own.

So long as you know the differences, you’ll be able to hire the right person for your situation. Do you need a money coach for help with budgeting and paying off debt? Or do you need a financial planner to handle large and complicated investments? Let’s get started!

Money Coach

A money coach helps people organize their finances and identify triggers that get in the way of goals. We can teach you about a great savings vehicle and walk you through opening a brokerage account or IRA. Some coaches call themselves financial coaches, myself included, but it sounds formal, so I don’t use it often. We teach financial literacy and support you in your financial goals. We provide accountability. There is no one-size-fits-all approach. Some people hire a money coach to get their finances in order, such as to build credit or pay off debt. Then they transition to someone who can handle their investments, like a financial planner. We like to help people get into a place where they are building wealth, saving for goals and learning to manage their money with confidence.

If you want someone to help you get started with the basics and who can hold your hand, provide accountability and keep you going on your path to building wealth, a money coach can do that! Many of us come from backgrounds that started out as “OMG, what am I doing?” and transitioned to “I’ve kicked ass and now I’m teaching others how they can do it too!” Which is what I’m doing! You can read about my journey and also schedule a free 30-minute strategy session to see if we vibe.

Money coaching is an unregulated industry. Many of us may train to be financial educators or use our own experience in helping people manage their money. Coaches must carry securities licenses if they’re going to sell or recommend financial products.

We can teach you the difference between stocks and bonds, ETFs and index funds. We can tell you which brokerage firm we use. But we can’t tell you which stock to buy or where to invest your money.

Financial Counselor

Or maybe you want a financial counselor, but you want to know the difference between a counselor and a coach. Karen Murrell and J. Michael Collins, from the Center for Financial Security at the University of Wisconsin-Madison provide a sort of definition to differentiate coaching from counseling like this:

“Coaching is differentiated from counseling in that coaches provide advice and encouragement, and do so in a process largely driven by the client. Coaching is not designed to be a therapeutic relationship or to aid clients in a more acute crisis resolution.”

As with coaching, financial counseling is unregulated. However, there are organizations that provide training and accreditation. The largest and most respected of these is the Association for Financial Counseling & Planning Education^®. The AFCPE^® describes its mission as one that promotes the financial well-being of all people. The association encourages people from all backgrounds to become financial counselors.

A financial counselor using the AFC^® designation has to pass a test and complete 1000 practicum hours in areas that cover these core competencies. Financial counselors must take continuing education courses every two years and must also sign an ethics code. You can verify accreditation on their website.

Financial Therapist

Financial therapy delves deep into the person’s behavior around money. Therapists use evidence-based practices to help people who need deeper assistance. This could be helpful if you’re dealing with bankruptcy or going through a divorce. Financial therapists are trained to look at multiple factors that influence how we handle money.

When we think of a therapist, usually we think of someone to talk to about a mental health problem. But many people in financial spaces believe (and studies show) a link between finances and mental health. Stressed over whether you can pay off debt? Or are you thinking that bankruptcy is your only way out? Then maybe it’s time to talk to a financial therapist. Your financial and mental health are intimately connected to sleep. Read my post here on what some call financesomnia!

Requirements for a Financial Therapist

My therapist has a Master’s Degree in Counseling. Other therapists have a Master’s Degree in Social Work. A financial therapist may or may not have a master’s degree, though many of them do. The minimum requirement is a bachelor’s degree to participate in the program. Check out the Financial Therapy Association if you want to find someone who can help you work through any issues. The program to become a Certified Financial Therapist is rigorous.

Financial therapy as a service or profession is unregulated. However, there are standards that must be met in order to earn a certification from the Financial Therapy Association. Many of these fall in line with standards from other financial services.

Financial Advisor

A financial advisor is someone who gives advice about money. Easy enough, right? Well, no. Anyone can call themselves a financial advisor. Some money coaches call themselves financial advisors which can be so misleading. A financial advisor can make recommendations for your investments and can also manage those investments. Your financial institution may offer the services of a financial advisor.

Do you need a financial advisor? That depends on your emotions, your money, the size of your assets and a few other factors. Are you REALLY uncomfortable even thinking about your money? Are you confused about the options? Do you need someone to put your fears at rest? You don’t have to be a six-figure earner to utilize the services of a financial advisor, but the financial advisor may have their own minimums.

Financial Advisor Fees

Does the advisor charge a flat fee or a percentage of your portfolio? Flat fee is best because you pay the same, no matter the size of your portfolio. And you won’t be paying commissions on investments you purchase. Here are some good terms to know from NerdWallet (emphasis added):

• A fee-only advisor doesn’t earn any commissions from investments. These advisors face the fewest conflicts of interest when offering advice. They may still piece together more than one fee type — for example, charging an AUM (Assets Under Management) fee for investment management and a flat fee for financial planning.
• A fee-based advisor charges a fee but may also accept commissions from investments. Many advisors combine commissions with an AUM fee.
• A commission-only advisor earns their income from commissions on the investments bought and sold on your behalf.

Before you hire someone, confirm that their license is active and see if they’ve had any disciplinary actions. You can do this at the Financial Industry Regulatory Authority (FINRA), the Securities and Exchange Commission (SEC) or your state securities or insurance regulator.

Certified Financial Planner^®

A Certified Financial Planner^®, or CFP^® is one type of financial advisor. This designation is unregulated. However, there are financial planners that can sell investments. You’ll need to check out their license and accreditation. Financial planners may refer a potential client to first work with a money coach. For example, a money coaching client may have completed a debt repayment plan and now needs advice on estate planning. That would be an example of the two working together.

A CFP^® can help you manage your money, grow your wealth and plan for the future. Depending on their services, they may manage your portfolio and sell investments. As with a financial advisor, you want to ask this person if they charge a flat fee or a percentage of your portfolio.

A CFP^® undergoes a thorough exam and must have a bachelor’s degree, in addition to the coursework and adherence to an ethics requirement. I’ve read that the exam for the CFP^® is harder than any exam taken in college!

Find a financial planner here.

Final Words

Before hiring anyone to help you with your money situation, do your research, and follow these tips as appropriate:

• Do help people with my situation (debt, estate planning, financial stress, etc.)?
• Can you help me with budgeting and basic financial knowledge?
• Do you charge a flat fee or are you commission-based?
• What is your investment philosophy? You want to be sure there’s a match.
• If the person has a credential, confirm that the credential is current on the appropriate accreditation website.
• Do I have to pay each time I contact you?
• If the person sells financial products, confirm that their license is current and there are no complaints lodged against them.
• Do you abide by a fiduciary duty? This means putting the client first.
• Do you have a list of all your fees?
• How will we communicate?
• How do you protect my privacy online? This is if you have to send or upload documents.
• How do you protect client confidentiality?

Don’t feel pressured to hire the first person you interview. Remember, this is your money and you want to work with someone who’s going to help you grow it.