Mastery over finances gives people more choices. A good financial cushion can make retirement feel more realistic and allow you to go on a vacation every year.
Unfortunately, financial stability isn’t the reality for most consumers. A survey from LendingClub and PYMNTS titled “Reality Check: Paycheck to Paycheck” revealed that approximately 60% of employed U.S. adults are living paycheck to paycheck. This lifestyle can lead to higher stress, especially if an emergency expense comes out of nowhere.
[Sign up for stock news with our Invested newsletter.]
Financial coaches aim to address this issue and others that their clients may face. Rather than recommend investments, as a financial advisor does, financial coaches focus on human emotions and how they relate to money. These coaches help clients create systems that lead to better financial results. They can also help people with their long-term financial goals.
Here’s what you need to know about what financial coaches do and how you can become one:
— What is a financial coach?
— Financial coach vs. financial advisor.
— Why become a financial coach?
— Can you become a full-time financial coach?
— How to become a financial coach.
What Is a Financial Coach?
Not everyone knows how to manage their finances. They may have questions about the best way to create a budget, manage their expenses and get closer to their financial goals.
Kris Maksimovich, president at Global Wealth Advisors, explains how financial coaches act as mentors along a client’s journey: “A financial coach helps people with behavioral finance. They generally provide information on budgeting, income and debt management, and they help people understand what their true motivations and fears around money are, acting as a catalyst to help set goals and better manage their money.”
Financial coaches help clients understand their emotions and provide practical insights about money management. However, that’s only part of the role. Rachael Bronstein, an accredited financial counselor and founder of Life’s Jam, emphasizes the need to simplify concepts and action plans.
“By breaking down the process into manageable steps and asking insightful questions, a coach empowers you to uncover your aspirations and take meaningful actions toward cultivating a healthier financial mindset,” she says.
Financial Coach vs. Financial Advisor
Financial coaches and financial advisors are similar in that they both offer insights that can help clients better navigate their finances. Financial advisors and most financial coaches have certifications and other accolades that demonstrate their expertise in finance.
However, the scope of these professionals is different. Financial advisors have more flexibility and can make specific investment recommendations and even manage portfolios. Financial coaches don’t offer those services.
“It’s important to note that coaches may not be financial advisors, but financial advisors often provide coaching as part of their practice,” Maksimovich explains.
Financial coaches can answer questions and suggest modifying a portfolio based on your risk tolerance and other factors. Financial advisors can go deeper and recommend investing strategies and even specific securities like funds, individual stocks and bonds.
Financial advisors are typically more expensive than financial coaches. Consumers looking for help with keeping their emotions in check and getting closer to their financial goals may want to work with a financial coach. However, if they want more help with investment ideas and asset allocation, a financial advisor is the better choice. Financial advisors also help people get closer to their financial goals, but their approach to investments is the key differentiator.
[SEE: 9 of the Best Bond ETFs to Buy Now.]
Why Become a Financial Coach?
The path to becoming a financial coach has fewer barriers than becoming a certified financial planner or a financial advisor. It’s more realistic for most people who are out of college and do not yet have an established financial background to become financial coaches.
It’s also more affordable and quicker to receive financial certifications to become a financial coach compared with a certified financial planner, or CFP. Beyond these economic advantages, a financial coach can find fulfillment as they help clients change behaviors that might be standing in their way.
“Becoming a financial coach offers the rewarding experience of making a positive impact on others’ lives and the flexibility to choose when and where you work. The profession allows for various coaching formats, such as one-on-one sessions, group coaching, workshops, online courses and more,” Bronstein says.
While Bronstein enjoys being a financial coach, she is candid about some of the challenges to expect in the industry. “Some challenges include the potential for fluctuating income, especially if you operate independently. Managing the operational aspects of running a coaching business, such as marketing, systems, compliance, contracts and sales, can be demanding,” she says.
Additionally, working with people facing financial hardships can be emotionally draining, requiring a high level of compassion and empathy. It’s crucial to prioritize self-care and avoid overscheduling to navigate these challenges effectively.
Being a financial coach lets you set your own hours. You can start coaching clients as a part-time side hustle and then build it into a full-time career when you are ready to take the leap. Clients can become repeat customers and refer their friends. You may have a slow start when you’re new, but financial coaches with good systems in place can generate consistent leads.
Can You Become a Full-Time Financial Coach?
It is possible to make six figures as a financial coach and reach full-time status. Financial coaches have varying price structures, but you can potentially charge $100 to $300 per hour as you build up more experience.
While the hourly rate suggests you can become a full-time coach right away, you have to fill out your calendar first. Initially, you will likely have to charge a lower rate to get the first few clients and testimonials. As you build your personal brand and generate more demand for your services, you can set higher prices for your services.
You will have to do a lot of prospecting to keep the calendar and pipeline full. Financial coaches frequently produce social media posts describing their expertise, client case studies and other content that promotes their services. You can be a financial coach while working at your full-time job and schedule appointments around your work hours.
Some months will be better than others as a financial coach. Continuing to prospect during your busier months can help you stay busy and generate extra income.
How to Become a Financial Coach
Technically, you don’t need any certifications to become a financial coach. Some people gain a financial education through personal experiences and by analyzing how other people manage their money. However, consumers can choose from many financial coaches, and many of them have some type of certification.
“If you’re considering a career in financial coaching, while licensing isn’t mandatory, I believe it’s a valuable bonus,” Bronstein recommends.
You don’t need a college education to earn financial certifications. Fincert and the Association for Financial Counseling & Planning Education (AFCPE) are two resources you can use to get certified. You will have to take an online class and then score high enough on an exam to earn your certification.
Once you have a certification, you will have to continue to stay on top of your financial education, establish a niche and promote your services. A niche helps you differentiate yourself from other financial coaches and can turn you into the go-to person for your target audience.
Financial coaches can get creative with their promotional channels. They can build personal brands via social media and online content. However, financial coaches can also get involved in local events and become sought-after experts in a particular region.
More from U.S. News
What to Know About Investing in Penny Stocks
8 Best Stocks to Buy Now With $1,000
What Is a Financial Coach? How to Become One originally appeared on usnews.com
