With Halloween around the corner, we will kick off the holiday season which seems to put money on everyone’s mind.
You might be thinking that you want help when it comes to money but you’re not sure where to start and I get it; the financial world can be a real maze.
Whether you’re saving for your dream vacation, paying off debt, planning for retirement, or just trying to make your money work harder for you, seeking professional guidance is a smart move. But who should you turn to?
“Financial professional” is an overarching title and what many people do not know is that there are several different types of financial professionals and advisors, each with their own set of perks and drawbacks.
In this three part blog post, we’re going to break down what this all means and some things to consider when choosing what works best for you. By understanding what each brings to the table, you’ll be better equipped to choose the right financial guide for your unique needs.
Okay, let’s start with the coaches. These folks are all about teaching and guiding you to make smarter financial choices. They’re the ones you call when you need help with spending plans (or budgeting), managing debt, or setting financial goals. Here’s what’s good and not-so-good about them:
- Education and Empowerment: Financial coaches focus on teaching you the ropes, so you can make smart financial decisions on your own.
- Affordable: They won’t break the bank – coaching services often come with more budget-friendly fees.
- Holistic Approach: They look at your entire financial picture, tailoring their advice to your unique situation.
- Accountability: The accountability that a coach offers can be that extra motivation you might need to avoid temptation to spend money in a way that isn’t in alignment with what is important to you.
- Limited Investment Knowledge: If you’re into complex investment strategies, coaches might not be your best bet.
- Lack of Regulation: Unlike registered financial advisors, coaches might not have the same level of oversight, so quality can vary.
- Licensing: While most financial coaches have certifications, they do not generally hold licenses to put strategic pieces of a financial plan or strategy in place such as investments or other financial products.
Now, let’s dive into different kinds of financial advisors. These pros offer a full range of financial strategies, planning, and/or investment management services. They’ll assess your financial situation and map out a plan to help you reach your goals. Here’s the general lowdown:
- Expertise Galore: Licensed financial advisors are usually well-qualified and experienced. They know the ins and outs of retirement planning, taxes, and investing.
- Tailored Solutions: They’ll create a customized financial plan just for you.
- Regulatory Backing: Licensed financial advisors have to play by the rules, which gives you some peace of mind.
- Cost: Some advisors charge fees based on a percentage of your assets, which can get pricey for those with substantial portfolios. (We will dive into this in part 3.)
- Barrier to Entry: Many (but not all) advisors have what is called a “minimum”. They may require you have a certain amount of assets or make more than a particular amount of money.
- Limitations: Advisors hold difference licenses which determine what solutions they are able to offer. Depending on the licenses your advisor holds, they may not be able to offer solutions which may be helpful for you.
A great place to start when choosing an advisor is to get clear about what it is you want out of this professional relationship. What support do you need? Are you looking for coaching or for investment advice? What financial goals do you have that you want help with? How much communication are you looking for from your advisor or coach?
When you are clear on what you want, you will be able to ask better questions when you are speaking to potential advisors or coaches to see if they are the right fit for you.
Stay tuned for parts 2 and 3 and subscribe below so that you do not miss out on the next post.