A Financial Advisor sells securities and insurance. A Money Coach teaches you new habits to improve your relationship with money.

Two Different but Related Roles

Is it just semantics that separates Financial Advisors from Money Coaches? Or, is there something more? Of course, I believe there is something more, or this would be a very short and boring article!

Financial Advisors and Money Coaches have fundamentally-different roles in helping you with money. Let’s use a sports analogy:

  • A Money Coach is like a Tennis Coach. They teach you how the game works, give you tips on how to play, help you stay motivated, and give you exercises to improve your game.
  • A Financial Advisor is like an equipment vendor. They teach you about the different kinds of equipment available and help you decide which is right for your style of play. You can’t win a tennis match without a racket and good shoes.


Money Coach

A Money Coach is a teacher that helps you learn new habits for handling money. They do not sell securities or insurance.

Financial Advisor

A Financial Advisor is a professional that is licensed by FINRA to sell securities and insurance. They may also do fee-based financial planning.


I Have Been Both

In 2002 I became a Financial Advisor with Waddell & Reed. I loved it. I got to help people with money. But, the down side was that I couldn’t help everyone.

The only products I could sell were mutual funds and life insurance. But, it turns out, not everyone needs mutual funds or life insurance at every stage of their financial journey. Plus, because I was paid on commission, I had a difficult decision to make. When someone came to me who was not ready for investing, but needed financial advice, I had to lose a commission to give them good advice.

That was hard.

Now that I am a Money Coach, I never have to choose between my clients’ financial success and my own. I am paid by the hour for coaching. If I do a great job and you are able to improve your finances, you’re more likely to come back for more! You may even tell your friends!

All of my incentives are aligned with yours, all the time.


When to Hire a Money Coach

The decision to hire a Money Coach is a very personal one. You must be ready to make changes in your life. If you expect to keep doing the same thing you have always done and have a Money Coach wave a magic wand and improve your financial situation… you are going to be disappointed.

But, if you are ready to do the work and improve your relationship with money, then you are ready for a Money Coach.

Hire a Money Coach when you are ready to live the Four Pillars of Personal Finance.

If you hire me as a Money Coach, I will teach you my 12-step Plan to eliminate debt and build wealth.


When to Hire a Financial Advisor

At some point in your financial journey you will likely need a Financial Advisor. At the right stage, Financial Advisors are an absolutely vital part of helping you put your money to work.

I have a 12-step plan to take control of your money, pay off debt, and build wealth. Investing starts on step 6.

If you are living paycheck-to-paycheck, have high-interest debt, and have no emergency fund, then there really isn’t much a Financial Advisor can do for you. In that situation, you should not be investing and life insurance may be inappropriate. (Read What Happens to Your Debt When You Die for more on that.)

But, after you have escaped the paycheck-to-paycheck cycle, paid off your high-interest debt, and built an emergency fund, then you’re ready! Go get a Financial Advisor!


Final Thoughts

I love Financial Advisors. And, I loved being one. At the right point in your financial journey, a good Financial Advisor will help you put your money to work.

I would love it if everyone needed a Financial Advisor right now. But, the reality is that not everyone is ready to invest, yet. If you start investing before you have a strong financial foundation, you’re making a mistake.

Without the proper foundation, your financial house can crumble. If you have high interest debt, then you are not ready to invest yet. If there’s a chance you’ll have to raid your investments or your retirement accounts to cover an emergency, then you are not ready to invest yet.

What to Read Next

For more information, check out these articles that offer more detail about these topics. Enjoy!


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