Advisor, Planner, Coach or Consultant - What's the Difference in Financial Support People?

The finance world is full of professionals filling unique roles in a dynamic ecosystem. Personal financial services are delivered by professionals operating under a surprisingly large range of professional titles.

Beyond the basics, there are dozens more titles that aren’t even covered in the title of this article.

For most individuals and families, four types of financial professionals have a larger chance than most of ending up in your financial plans:

• Financial Advisors
• Financial Planners
• Financial Coaches
• Financial Consultants

There are certainly similarities between all of the above. They are all financial service professionals that offer some form of mentorship to their clients. But these terms are NOT interchangeable.

Let’s go over these financial job titles and remove the confusion surrounding them.

What is a Financial Advisor?

Financial advisors are personal financial service providers. It’s a deliberately broad term used to describe professionals who help others manage money. Financial advisors can then be broken down into other titles, including financial planners.

They offer hands-off advice that is purely meant to help you build wealth. They provide long-term financial advice (and planning) intended to help you reach long-term goals.

Financial advisors are capable of helping you with many of the finer details of your financial life. But they focus on helping you reach broad, comprehensive financial goals like:

• Reaching a comfortable retirement
• Saving up for a new property
• Leaving more behind for your loved ones

These financial professionals normally work with clients who need a few financial services in practice:

• Building investment portfolios
• Managing existing assets
• Setting up an actionable retirement plan
• Long-term healthcare considerations
• The purely financial side of estate planning

What Makes Someone a Financial Advisor?

• A FINRA Series 65 License
• One of the many licenses for this broad category of financial professionals

What is a Financial Planner?

A financial planner is a specific type of financial advisor. So, unlike the other titles on this list, they do fall under the same umbrella as others. But it’s worth reiterating that not every financial advisor is a financial planner.

Financial planners serve the same market segments as other financial advisors. This title is perhaps the broadest. FINRA’s qualifications for “financial planners” are such that very many people can claim the title, including many:

• Brokers
• Various advisors
• Insurance agents
• Accountants
• Even others without financial credentials

In terms of responsibilities, financial planners help people manage money. More specifically, their most common duties include:

• Managing investment accounts for individuals or organizations
• Strategizing for the long-term goals of individuals or organizations
• Managing other accounts
• Guiding individuals and organizations through choices such as insurance policies, investments, asset management, and sometimes estate planning

What Makes Someone a Financial Planner?

This is a less strict category. You should look for many of those same licenses financial advisors are expected to have. Then they normally have expertise in at least one key area of finance:

• Investments
• Tax law and tax planning
• Estate planning
• Asset management
• Risk management

What is a Financial Coach?

Financial coaches work with individuals and focus on fundamental financial ideas and habits. They work with clients to enhance their financial behaviors.

This difference alone sets financial coaches apart from other professionals. A coach is someone who teaches you, through lessons, demonstration, and task delegation, where appropriate.

Financial coaches work closely with their clients to get a clear picture of their financial life. They then:

• Provide a frank and honest assessment of clients’ finances
• Look for areas where improvement is possible
• Help people create savings or tackle debt
• Help people reduce spending and exercise financial discipline
• Handle emotional barriers holding people back from better financial practices

Financial coaches are much like other coaches. You can think of a financial coach as a personal trainer. But instead of training your muscles, they train your mentality and habits surrounding money.

What is a Financial Consultant?

A financial consultant is more similar to a coach than to any of the other titles. Consultants work with individuals or organizations to assist with financial decision-making.

Like coaches, consultants are trained but aren’t specifically FCA-regulated. They are able to review an individual or organization’s financial situation and current goals.

They then discuss these issues and make strategic suggestions. But they also consult with their clients directly to make a plan.

The differences between financial consultants and coaches are very grey. They aren’t different in terms of regulation, adding to the difficulty.

Coach/Consultant vs Advisor/Planner

The most important differences here are between:

1. a) Financial advisors and planners
2. b) Financial coaches and consultants

Within groups a and b, there are many similarities, and no meaningful regulatory or even descriptive differences. However, the differences between the groups are very meaningful:

• Financial advisors and planners are regulated by the FCA and FINRA. Coaches/consultants are not necessarily
• Financial advisors/planners are more focused on and professionally qualified to make investment suggestions
• Coaches/consultants can suggest financial products, but aren’t qualified to suggest specific ones
• Advisors/planners normally charge a percentage-based fee for the money they make their clients
• Coaches/consultants typically work hourly
• Coaches/consultants are normally willing to work with anyone. Advisors/planners normally work with people not suffering from too much debt and thus able to invest

Conclusions

The confusion between the major financial service providers is understandable. There are many individual financial professions.

The differences between financial advisors vs planners or coaches vs consultants are not very meaningful. But the differences between the two camps are very important to understand.

Photo by Kindel Media