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What Can You Do as a Financial Coaching Professional?

What Can You Do as a Financial Coaching Professional?

Learn about the role of a financial coaching professional and how to become one. Also, find out how a financial coach differs from a financial advisor.

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Wouldn’t it be helpful to have someone guide you through how much you should be spending and saving given who you are, what you care about, and what goals you have? While a friend might be able to talk you out of buying that expensive bag you’ve been eyeing for some time, a financial coach could further help you by educating you to reach your financial goals. 

Read on to learn about financial coaching, including what a financial coach is, what they can and can’t do, and how to become a financial coach.  

What is a financial coach?

Financial coaches enable clients to understand their financial position, aspirations, and budget. While they’re not entitled to make financial decisions on the client’s behalf, they chart a blueprint consisting of techniques, tools, and resources, inspiring client confidence.

What do financial coaches do for clients?

Before we get into the details, it’s important to note that financial coaches aren’t planners, analysts, or consultants. Instead, coaches motivate clients and hold them accountable on the route to achieving goals. 

Here’s a bit more about what a financial coach can do:

  • Set financial goals: Financial coaches outline a set of SMART goals for clients and create a roadmap with important points to achieve them. These goals can be both short and long-term.     
  • Improve money habits: These coaches assist clients in maintaining a stronghold on their expenses. They impart knowledge about spending patterns, savings, and money management. For example, financial coaches might ask clients to start a “rainy day fund” to combat unforeseen circumstances. 
  • Provide skills and tools: Financial coaches offer clients the resources to achieve long-term goals by providing them with the financial literacy tools they need. While coaches don’t advise their clients on finances, they can explain how to set and reach attainable goals. This could include maintaining a planner to track expenditures.
  • Compare financial products: Financial coaches help clients by suggesting the best financial product or the one that suits their needs the most.

Common goals of financial coaching

Financial coaches won’t exactly help you find a way to pay for that dream house but will provide you the tools to understand and improve your economic health. This’ll help you get closer to achieving more meaningful goals. Remember that accomplishing long-term objectives means focusing on short-term tasks and ticking off boxes along the way. Here are some aspects of your financial health that coaches can help with: 

  • Paying off credit card debt or student loans
  • Creating a savings account or an emergency fund 
  • Improving your credit score 
  • Sticking to a weekly, monthly, and annual budget 

Financial coaches vs. financial advisors

Financial coaches help clients achieve financial well-being. They don’t advise clients about investments or money decisions. Here are some differences between the two: 

  • Responsibilities: Coaches aim to change clients’ habits to improve financial security, whereas advisors create investment strategies and provide financial advice for clients to manage their assets. Coaches guide clients on meeting goals instead of financial planning issues, such as where to invest money and how to grow it. 
  • Affiliation: Advisors are often associated with a banking institution, company, or financial product, while coaches aren’t. Instead, coaches work with clients no matter where they keep their money and how they decide to invest it. 
  • Certification: Like many coaches, financial coaches don’t have to undergo any specific training or certification program. Of course, excellent coaches will pursue education in a related field such as economics or finance. Advisors, on the other hand, must have a college-level degree before beginning work. 
  • Management: Financial coaches focus on money management's emotional and mental components, not so much on the numbers, like an advisor. Coaches help clients understand what’s keeping them from reaching their ideal financial life and chart a reasonable route forward. 

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How to become a financial coach

If you’re interested in promoting behavior change in clients and improving their personal finances, consider becoming a financial coach. Here’s how: 

  1. Pursue an education: Remember, excellent coaches know their subject matter inside and out. Aspiring financial coaches should earn a related degree and consider getting a Financial Industry Regulatory Authority (FINRA) license. You could study to become a certified financial planner, analyst, or advisor to gain valuable insights as you work with clients, but it shouldn’t change the style of services you offer as a money coach. 
  2. Choose a niche: The coaching field is vast, and every specialty consists of sub-specialties called niches. Draw on your personal and professional experiences to find a specialty area. Perhaps you graduated college with a good amount of debt and are passionate about helping others pay off theirs. Focus your business around this passion, and create a personalized financial coaching approach. 
  3. Gain experience: Shadow an experienced financial coach or seek a handful of first clients at a discounted rate to get your bearings. Doing so will give you a feel for the nature and demands of the work, and you’ll be better prepared to start your business or operate at full steam. 
  4. Set up your business: Before opening a shop, write a detailed business plan outlining your financial coaching services, programs, and respective costs. Explore your target audience, their needs, and how much they’re willing to pay in your geographic area for this service to develop your marketing strategy, which should also be part of your business plan. Finally, it should be no surprise to someone with a passion for finance that you should set your own economic goals. Take a look at your financial situation, including start-up costs, cash flow, overhead, and debt. Commence your coaching business by making a plan before helping clients. 

Focus on your clients, not on administrative tasks

Coaching is demanding work, and financial coaching is particularly sensitive. Finances touch both the emotional and practical aspects of clients’ lives. Do right by your clients by staying organized and focusing on helping them make better financial decisions. 

Practice’s customer relationship management (CRM) tool helps you safely store client data, take appointment bookings, receive payment, and send and receive messages and documents. Plus, you join a community of other coaches working hard to help people realize their dreams. Try it today

Free coaching contract templates

We worked with our lawyers to create coaching contract templates, free for any coach to use. Plus, a couple of sample agreements.

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