Erika Gonzalez

Unlock Technologies staff writer

Money Monday: What Does a Financial Coach Do?

Erika Gonzalez Unlock Staff Writer

A financial coach could help you with your bedget

Key Takeaways

  • If you’re having trouble navigating your finances, it might be time to seek professional help.

  • Financial coaches are different than Certified Financial Planners (CFPs) and it’s important to understand the differences.

  • Most financial coaches work on a fee-for-service model, charging clients by the hour, per program or on a retainer basis.

Do you carry a credit card balance? Regularly run out of cash before your next payday? Fall short on your savings goals?

You’re not alone. Just 34% of Americans surveyed in 2021 by online financial advisor Personal Capital reported feeling financially healthy, down from 48% the year before. More than half of the respondents said they were still working on meeting an array of financial goals, including becoming debt free, building an emergency fund and making big purchases without worrying.

Financial coaches can help support your money management goals

The findings suggest money management doesn’t come easy. If you’re having trouble navigating your finances, it might be time to seek professional help. One potential option is to hire a financial coach to help develop your money management skills and create a plan to improve your financial wellbeing.

Financial coaches are relatively new entrants in the crowded financial services field and can guide you through many of the personal finance tasks that don’t come naturally. This could include creating a budget, managing debt, establishing an emergency fund and developing a plan to achieve longer-term goals such as buying a house or saving for college

The goal of a financial coach is to educate clients on the basics of personal finance and, as a team, create a spending plan that reflects the values and goals of the client.

-Garrett Philbin, kitces.com.

It's important to note the difference between a financial coach and other financial professionals, including certified financial planners (CFP). To use the CFP designation, a financial planner must meet rigorous education, ethical, experience and testing requirements. A certified financial planner can support clients with issues such as estate planning, tax planning, investment advice and insurance needs – services that financial coaches don’t typically provide.

A CFP handles many facets of money management.

However, working with a certified financial planner usually requires a significant investment and many will only work with clients who meet certain asset minimums – often at least $100,000.

A financial coach might be a better choice to start with if you’re still in the process of growing your assets or simply looking to get your finances in order. Philbin says financial coaches also help hold clients accountable for meeting the financial objectives they’ve set. Because it’s a partnership, finding a coach that is a good fit – in personality, philosophy, and experience – is crucial.

To start, you might ask friends and family if they’ve worked with a coach and who they recommend. Education is another way to sort the various options. Although financial coaches don’t need any specific certifications or designations to hang their shingle, there are a few organizations that offer training for financial coaches.

Research your potential coach - carefully

The Association for Financial Counseling and Planning provides Accredited Financial Counselor (AFC) designations for financial coaches, requiring candidates to take an examination to demonstrate their knowledge. AFC coaches must also commit to serving as a fiduciary, meaning they must act in the best interest of their clients. You can search for an AFC professional here. The National Financial Educators Council (NFEC) also offers financial coaching certifications. Certificate holders receive more than 320 hours of professional development training.

Cost should also be a big consideration. Most financial coaches work on a fee-for-service model, charging clients by the hour, per program or on a retainer basis. NerdWallet reports that coaching rates typically range between $100 and $300 an hour. Valery Vargas, a job coach who focuses on serving Millennials, offers 90-minute one-on-one meetings for $225 and six-month programs on a sliding scale between $800 and $2,000.

6 important qualities of a financial coach

If those costs seem out of reach, consider nonprofits and government agencies that offer coaching for free or at a discounted rate for those who qualify, usually recent graduates, veterans or those who are low-income. Purposeful Finance, which provides subsidized, low-cost coaching is one option, as is the Association for Financial Counseling and Planning, which offers pro-bono, virtual financial coaching sessions. Visit AFCP to learn more.

To get the most for your money, experts suggest asking about what’s included in your session or package and how long it might take to see results. Most clients work with their coaches for a limited period, until they gain enough knowledge and confidence to successfully manage their money on their own. The hope is to form healthy financial habits to last a lifetime.

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