What Exactly Does a Wealth Coach Do?

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Wealth Coaching versus Financial Planning: The Pros and Cons of Financial Health Consultants

Managing your finances can sometimes feel a tad overwhelming. From the basic bills of life to planning for retirement, it is easy to feel lost as you navigate the financial waters.

But it is important to realize that you do not have to be alone on the journey. There are people out there who are trained and qualified to help you manage your road to wealth and anyone whether rich or not-so-rich can and should utilize these services.  Why? Because it will probably cost you more in the long-run not to use them!

Today we are going to focus on two different types of financial advisors, a financial planner, and a financial wealth coach.

Now you may be asking yourself what the difference is between a wealth coach and a financial planner.


Basically, a financial planner gives you advice about how to manage your money, typically sells you investments, and can advise you on taxes related to your wealthy lifestyle. A financial planner (typically) has a very narrow view of your financial life and is focused on crunching the numbers to achieve the best result. This is not necessarily a bad thing…It’s just what is.

The best financial planners will usually have a certification from an authoritative body that recognizes excellence.  For example in the US we have the Certified Financial Planner (CFP) designation which is a trusted brand.  A person with this designation is expected to have the highest ethical standards and training in wealth creation investing.

Then we have a wealth coach, a person who (usually) takes the time to sit down with you to offer ideas on how best to manage your money. They also help you create a living budget and is more holistically concerned about the future of your overall financial health and wealth mindset.

With these distinctions in mind, made let’s break down the two types of wealth management consultants by looking at the pros and cons of using the services of each one.

What are the pros of hiring a financial planner?

Financial planners are paid to think of everything you do not typically worry about unless you are constantly reading wealth building books. They are skilled at choosing and navigating retirement plans and can advise you on the best investments for your retirement. Often times, a portion of these investments can be aggressive and if successful, your money can grow at exponential rates.

Financial planners also work hard to keep your head out of speculative clouds, if in fact you are reading too many speculative books on wealth creation. Many people think they are going to have millions of dollars for retirement, but if you’re 52 and haven’t saved a penny yet then that will be a tall order.

Building wealth from nothing quickly is not impossible, if that’s really your goal, but you’ll really have to have a lot of things going your way to make it work. A financial planner will focus on the here and now of your more safely building financial wealth, allowing you to plan around your current means and make realistic projections.

You don’t have to stick with a financial planner for the rest of your life so if you end the relationship there will be no ongoing fees. You can choose to merely pay for your financial plan, then go on with your life. If you choose not to buy any investments or mutual funds from the financial planner then your interaction with he or she will be short, sweet and the costs will be negligible in the long run.

Because the good ones have to constantly take wealth management courses, financial planners should think of everything you haven’t thought of like death and estate transfer taxes and other tax codes you never knew you could use. A solid financial planner is great because they will keep abreast of tax law and can help you save every penny you can from the gaping maw of the IRS.

If you prefer, you can pay a planner to completely organize your financial life for you. This is good for people who do not want to or cannot manage their money. Let’s face it, money management can be really hard for some.

A guiding hand can really help with difficult financial situations by working with you to create a budget (but they cannot make you stick to it!). Many people have lived their lives without a budget and find it a useful tool to help them better understand their finances and it may even allow them to save money by avoiding unnecessary spending especially when trying to figure out how to get outta debt at the same time.

You can run your latest crazy idea to create wealth online past your financial planner for a reality check. A financial planner can also help you find ways to save money on insurance. Insurance companies are in it to make money just like anyone else, as such, they hate it when you find loopholes that work to your favor.


What are the cons of hiring a Financial Planner?

Some of the fees you pay may not be disclosed until you end up paying for them!  Make sure you ask about any and all fees before you agree to work with a particular financial planner. What’s more, you shouldn’t feel obligated to work with one planner over another. If you find someone with cheaper fees, then utilize their services instead. There are no friends in love or creating wealth.

Sales of investments are a big way for financial planners to make money. After all, they are in this to make money too!  Be cautious of the types of investments you buy from a financial planner.

A lot of financial planners will try to sell you mutual funds and plans that have high fees associated with them. Mutual funds are a good investment in the right portfolio but you don’t want your total lifetime return on investment nibbled away by high fees (usually called “load”).

The financial planner is not concerned with this because he or she still gets their cut of the fees on the sale of the investment while you may not feel the bite right away.  These fees tend to rear their ugly head when you decide it’s time to sell it and present a real hazard when building wealth. Based on your risk profile, a good financial planner will be advising you to buy a product that is in your favor and contains a low load or fee.

Tax laws change and as such, you may have to return to the financial planner for new or updated wealth creation strategies and pay another fee. The plans offered by financial planners are often set in the present and as such this could mean you have to visit them yearly and pay more fees to have the plans you have set down re-worked.

What’s more with you back in the hot seat, the financial planner is going to take the opportunity to try and sell you all those investments that you “didn’t know you needed”.

What are the Pros of hiring a wealth coach (finance)?

Wealth (sometimes referred to as “financial”) coaches focus on all stages of your life and are supposed to help you plan for all facets of your future. The advice a wealth coach provides you not only focuses on how to build wealth, but how to live well, and how your grand-kids can live well too!  It is best if you find someone who seems like they know you better than you do yourself.

For example, they may suggest trust funds, savings accounts and or 401k’s depending on what suits your budget and life goals at the time.

Wealth coaches care about what you want out of your financial life and coach you accordingly. After all the financial coach knows you are sitting in their office because you want life help, not just a financial plan. The wealth coach should listen to your concerns and make sure that whatever they do is in your best interest for the present as well as the future.

Also, when it comes to overwhelming problems such as debt or bills you have fallen behind on, wealth coaches can help you overcome these obstacles with a sound timeless principles such as a simple budget.  However, a financial coach should also help you see the true root of the problem, which for many people is not having sound spending habits.

A budget can be a very helpful way to dig your way out of debt and make sure you stay that way. It takes massive willpower to stick to a budget. To help you with this the wealth coach might help you create a savings goal or incentive that really speaks to you for staying on the budget.

Money management is not all about wealth tips, nor is it only meeting boring people with pocket protectors, calculators and zero personality.  A good wealth coach can be the person to help you navigate rough waters and… who knows… with a tight belt, you might get to a point where you can take a killer vacation or have the honeymoon you dreamed of.

A financial coach should guide you to the point of being able to manage and create your own financial freedom. They are coaches after all!

It is true that they will be there for you as long as you need them, but the ultimate goal is really for you to become financially independent.  The goal is that you are no longer afraid to look at your bank and credit card balances with a sense of not knowing what to do next. With the education provided to you by your wealth coach, you should have a much better chance at long-term financial success.

When it comes to investment choices  a wealth coach will typically help you look for low-risk investments that slowly build up your future funds while protecting you from loss. Now you might be thinking low risk equals no reward but that is not true.

As previously stated higher-risk investments like mutual funds promise high returns but with that comes the risk of low, no, and even negative rates of return. With lower risk investments, you will eventually see a return from your investments, but it will not happen insanely fast.

A wealth coach usually isn’t there to sell you any particular product, so they will be much more honest about investment risks and other aspects of potential money makers. In a world that is usually sales driven, this is a refreshing change from the push by others to purchase stocks and other fee ridden products.

A wealth coaches fees are usually fully disclosed up front so there are no surprises. This gives you the power to budget for the service for as long as you need to. In fact, some wealth managers will even organize smaller automatic payments (if you so choose) on your behalf to pay their fees.

A wealth coach shouldn’t leave you stuck in a bad or poor performing investment without a plan.

However, if for some reason you wish to leave your money in an high risk investment, then the financial coach will advise you on the pros and cons, but if you insist, they will follow your wishes and leave the money in the investment. They are your coach, not your parent, and again they are there as a guide on the path to financial independence.

What are the cons of hiring a wealth coach?

Wealth coaches ultimately leave the decisions up to you. Now, this can be a pro and a con. Most people seek financial help because they cannot make sound decisions. Whereas others just want a little guidance and expert advice before they enact their financial goals and plans for the future.

Investments bought into by your wealth coach often have an expected low rate of return. This means that your wealth, while steady, can often make it seem like your lawn grass is growing at a faster pace. If you are not happy with this setup, you could always ask them to be more aggressive with your investments or you could always make the decision to seek out another type of money manager.

You are paying someone to do something you can normally do on your own. 401k’s are not hard to manage and there are even “dummies” guides to investing, but I personally can’t vouch for the effectiveness of those books.

Do your research on what you want from your finances before you seek paid advice. The internet has a wealth of information to help you make an informed choice.  The problem is that there might be too much information. Who knows though, you might make way more money for yourself allowing you to invest the fees you were going to pay them back into the market.

Some wealth managers may not be qualified to do the job. Make sure you are working with someone who is certified and ask to see their credentials.  Check their rating with the BBB or their local chamber of commerce.  Do Your Due Diligence Homework!!!  If they misuse your money or worse, run off with it, then it can be very hard if not impossible to get back.

Moreover, there are an alarming amount of wealth coaches who do not even have business degrees or any other related degree. Would you want your money managed by someone who has no idea what they are doing?

Where to from here?

Okay, so those are the pros and cons of choosing a wealth coach versus a financial planner.  Now that you are equipped with that knowledge the decision for who to go forward with is up to you.

As you can see there are a lot of similarities between the two types of planners. From this point, you need to consider what you want from the financial service and shop around to make sure you find something that fits your budget.

Sit down with your loved ones and discuss your finances, that way you can go into the meeting with a clear idea of what you want for the present and future. Remember to ask the potential coach or planner any questions you have, get a clear rundown of their fees and make sure they are registered with the applicable organizations before you embark on a financial relationship with the respective person.

Ultimately, if you are not happy with the services that are being provided to you, or you feel you are not being listened to then all you need to do is break ties with the planner or coach and look elsewhere. It is your life and your financial freedom, you are the one who is in control and they are there only to advise.

And if you’ve read this far, congrats! You get the prize from the Oracle of Oklahoma – the greatest business coach of all time!