What Is Financial Coaching — and Should You Try It?

Do one thing: Before hiring a financial coach, or any financial advisor or planner, make sure to ask for references and then check with those individuals and ask for honest input.   

Could You Use a Financial Coach?

Here are some questions that may help you decide if you need a financial coach:

• Maybe you have a new job with a long list of benefits to consider.
• You need an updated roadmap for your retirement years.
• Perhaps you are a new parent or caregiver who needs to better manage the financial implications that those roles entail.
• Or maybe you have your budget and savings moving in the right direction, but could really use someone to talk through big decisions with. 

If you’re feeling unsure about money and your personal finances, you aren’t alone. 

Many Want to Improve Financially

A survey conducted in May found that more than 80% of U.S. adults say they want to improve their financial situation, but more than 40% aren’t sure about exactly how to do that. The national poll also showed that 41% of respondents believe their finances will stay the same in the year ahead, but some 20% anticipate being worse off financially by the year’s end.

It doesn’t have to be that way. If you could use a little help in the money department, we’re here for you. Fortunately, there’s no shortage of people out there willing to help you make better decisions related to your finances. We talked with financial experts to explain what financial coaching is and who could benefit from those specific services.

What is Financial Coaching?

Financial coaching is like hiring a personal trainer, but instead of helping you get physically fit or work on a specific fitness goal, they strive to help you with how you handle money and other ongoing financial decisions. The role of a coach is not just to educate but also to help implement and sustain behavioral changes when needed. Providing financial literacy is often at the foundation of this approach, but coaching is more about guiding someone through the nuances of their personal finances.

What Do Financial Coaches Do?

Since financial coaches often tend to focus on dealing with debt (and how to save more effectively), a financial coach could be a good fit for someone who needs assistance with:

• Managing their day-to-day finances
• Setting realistic savings goals
• Learning to set and stick to a budget

Certifications for Financial Coaches

Financial coaches can earn a variety of certifications and designations, among them:

• Accredited Financial Counselor (AFC)
• Certified Financial Education Instructor (CFEI)
• Certified Money Coach (CMC)

It’s important to know that financial coaches aren’t licensed to recommend specific products or offer anything more than broad investment advice. If you need more specific guidance, you should look for a certified financial planner (CFP).

Kevin C. Feig, a certified financial planner who is also a CPA with an added designation as a personal financial specialist, offers financial coaching services at his firm, Walk You To Wealth. “One area of caution,” he says, “is that coaching is an unregulated field, meaning anyone can call themselves a financial coach, regardless of their background, education, or certifications.” 

Coach vs. Advisor

Financial coaching stops short of specific investment advice, explains Feig, so if you need someone to manage your money or tell you precisely which assets (stocks, bonds, crypto, etc.) to buy, then you should look for a financial advisor. 

A Cost-Effective Option

On the other hand, if you are looking for someone to help you understand your various financial options so you can make informed and educated decisions, a financial coach may be a more cost-effective option, he says. At the company Feig founded, financial coaching services are primarily geared toward people new to financial planning, “who may be struggling with debt, or just beginning to build wealth, who wish to create a secure future by mastering budgeting, saving, and debt management.”

Questions to Ask Before Hiring a Financial Coach

Money is often a tough topic to talk about in public or private, so it’s smart to make sure you know exactly what you are getting for your hard-earned cash before agreeing with a financial coach. As stated previously, you should ask financial coaches for references and then check them out. Here are some other questions to ask potential coaches before hiring one.

1. Do you have any certifications or designations?
2. How are you paid? 
3. How would you describe your typical client?
4. How often will we meet?
5. What’s the best way to get in touch with you?

Financial Coach Gut Check

Before selecting a financial coach, it’s important to shop around and set up interviews with at least two or three before choosing the one you will work with. Because when it comes right down to it, you have to feel comfortable with the person who is being paid to help you better manage your money. When you interview candidates, pay attention to how you feel around them and ask yourself a few more questions:

• 1. Do they seem trustworthy?
• 2. Are they compassionate?
• 3. Do they ask you questions?
• 4. Could you see yourself being honest with them about your money habits?

If the answer to any of these questions is no, then trust your gut and keep looking.