Written by Karen Eley (former Financial Adviser turned Money Coach), Women Talking Finance

Financial Advisers, Counsellors and Money Coaches: Understanding the Difference

When it comes to managing your personal finances, seeking guidance and support from a professional can be a game-changer. In the world of financial assistance there are essentially three levels of support: 

• financial adviser
• money coach and 
• financial counsellor.

All three help individuals improve their financial position, but their approaches and expertise are quite different. 

Let’s delve into the distinctions between a financial adviser, financial counsellor, and a money coach and help you determine which professional might best suit you. 🤑

A financial adviser is a licensed professional who helps clients build on existing wealth and typically require you to already have assets accumulated or a high disposable income.  These professionals have extensive knowledge and experience in investment strategies, retirement planning, tax optimization, and risk management. Financial advisers work with clients to develop tailored financial plans that align with their goals, risk tolerance, and timelines.  They analyse clients' financial situations, recommend suitable investment options, and manage and monitor portfolios to reach a clients’ objectives.

A money coach, on the other hand, takes a more holistic and behaviour-based approach to personal finance. Money coaching is rooted in the belief that our relationship with money is deeply intertwined with our emotions, beliefs, and behaviours. Money coaches work with individuals to identify and address psychological barriers, emotional triggers, self-limiting beliefs and sabotaging behaviours that may hinder financial well-being. Their aim is to empower clients by helping them gain clarity, build healthy money habits, and develop a positive mindset around finances.

A financial counsellor focuses on providing guidance and support to individuals facing financial challenges, hardship, and difficulties. They typically work with clients who are experiencing financial stress, debt problems, or need assistance with budgeting and money management. Financial counsellors aim to empower clients by helping them understand their financial situation, develop practical solutions such as negotiating debt repayment plans, and build healthier financial habits.  These services are typically funded by government agencies for charitable organisations and therefore no cost to individuals who can demonstrate financial hardship.

Let’s delve further into the differences between these money experts.

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FINANCIAL ADVISER

Financial advisers are licensed to provide financial advice and will give you the information they deem necessary to your situation, to assist you make financial decisions by considering your current circumstances and goals. When working with a financial adviser, ideally you'll create a long-term relationship and work together over many years. Advisers will have a more analytical and strategic approach with their work, although many take a values-based approach taking into consideration your life goals and make appropriate financial recommendations based on these.

When should you use a financial adviser? 🧐

• you are looking for specific fund/investment/insurance recommendations
• you need advice about switching or consolidating superannuation funds
• you want to invest your savings or a lump sum of money and need advice selecting the right investment/s.
• you’re looking for wealth protection or life insurance advice
• you’re nearing retirement and need help planning for it.
• you want to set up a SMSF (Self Managed Super Fund) or already have one
• you want to create a long-term, wholistic financial plan and have an investment professional manage your money for you on an ongoing basis.

A financial adviser generally charges an upfront advice fee and implementation fee and then an annual ongoing advice fee to manage your investments. This can either be a percentage of the investments they provide advice on or a flat dollar amount, which you can negotiate with your adviser.

Financial advisers are subject to regulations imposed by financial authorities, ensuring a certain level of professional conduct and accountability to deliver quality advice – so expect to pay for it.‍

MONEY COACH

Money coaches look at the behavioural and emotional financial aspects and client’s relationship with money, in addition to financial education and knowledge building.

A money coach starts not with your income and assets but with you – your values, your financial habits, your goals, your desired future involving changing your current relationship with money. 

A money coach can help you:

• uncover the deep-seated money blocks that are subconsciously holding you back, personally and financially
• setting financial goals and creating an action plan 
• build your financial knowledge, know-how and confidence
• hold you accountable over a period of time and help you make shifts in your behaviour or money habits that challenge you 
• develop financial and emotional strategies that create long-lasting change and maximise your financial potential and outcome
• review and structure your cashflow, income and spending to get you on a path to saving or earning more money.
• Get you ‘financial- adviser’ ready

Having a money coach is great when you want to understand why you do what you do (or don’t do) with your money, or if you feel stuck in a financial position.  Things like aversion to managing money, over-spending, under-spending, financial fears, low self-knowledge or confidence.

Money coaches typically charge by the hour, or for a package of coaching sessions for 3 to 6 months, and some offer 1-off cashflow sessions. 

Money coaching is a relatively new field and does not have the same level of regulatory oversight as financial advisers or counsellors, so it’s important you do your research when selecting a money or financial coach to ensure they have specific training in a financial background, education and experience to be able to assist you and ensure they do not delve into the financial advice space which can only be provided by a licensed and qualified financial adviser. Ideally, they will have formal qualifications or training in Money Coaching, as it is a niche area.

FINANCIAL COUNSELLOR 

Financial counsellors, on the other hand, focus more on providing guidance and support to individuals or families facing financial challenges. They often work with clients who are struggling with debt, budgeting, or financial hardships. Financial counsellors can hold certifications such as Certified Financial Counsellor (CFC).

When you should use a financial counsellor:

• You’re not in a financial position to pay for assistance and meet criteria of financial hardship.
• If in debt or financial crisis: they assist clients in managing debt, developing debt repayment plans, and negotiating with creditors on their behalf.
• Needing help creating realistic budgets, track expenses, and establish financial goals.
• Looking for emotional support: they understand the emotional impact of financial difficulties and offer support and guidance to clients during challenging times

Which one for me? 🤷🏻‍♀️

Consider your financial needs, the level of guidance required, and your comfort level with each professional's area of expertise. Additionally, don't hesitate to interview and ask questions to ensure that the professional you choose aligns with your goals and values. 

Seeking professional guidance is a proactive step toward improving your financial well-being, regardless of whether you choose a financial adviser, coach or counsellor.

Go you! 🤩

Note:  The Financial Counsellor organisation I recommend and send clients to who can’t pay my fees are: Good Shepherd Australia. They have interest free loans for individuals needing financial assistance and a wealth of support for those who in the past (no time limit) have suffered financial abuse. They truly are financial angels…..