In this article, we’ll explain the differences between financial advisors, financial coaches, and other service providers such as debt advisors.
Summary of services
Different financial experts are best suited to help with different tasks. Here’s a useful summary of the financial areas and outcomes that different experts might best help with:
Financial area | Outcomes you might be looking for (I want to…) | Who provides this service? |
Choosing financial products | I want to invest some money, where should I put it? I need to create a will, can you help me? | Financial advisor
|
Financial planning | I want to send my children to university and retire at 60, how can I plan my finances to get there? Should I buy a house or put my money into an investment fund? | Financial advisor who specialises in planning |
Estate planning | Can you help me to create a will? I need help to plan what would happen to mine or my parents’ estate if we become unable to make our own decisions | Estate planner, paralegal service or financial advisor |
Understanding aspects of personal finances | How do pensions work? Why does it matter if I am in debt? | Financial coach Government services A financial advisor could help with this but they’d be much more expensive |
Changing attitudes or behaviours that relate to money | I keep getting into debt - how can I stop doing this? I want to build the habit of saving £100 per month. Can you help me look at my finances to work out how to do this? | Financial coach Debt advisor |
Financial Advisors
A financial advisor is someone who helps you build wealth and prepare for your future through long-term financial planning, and/or choosing specific financial products. Many financial advisors specialise in certain areas such as pensions, investments or estate planning. Others focus on financial planning - taking a more holistic look at your long term financial situation.
Financial advisors have to achieve certain qualifications and register with a regulated authority (Financial Conduct Authority) to be certified for their work. Because of the time and money they need to spend to get certified, they tend to charge higher fees for their service.
‘Independent’ financial advisors are independent of any particular banks or product providers. This means they can look at all of the products on the market and recommend what they think is best for you.
Coaches
A financial coach is someone who will help you understand the basics of personal finance and help you develop and maintain healthy financial habits. Coaches focus on their clients’ relationship with money and often work to help them change their behaviours in order to achieve goals such as reducing spending, setting budgets or getting out of debt.
Financial coaching is not a regulated profession, so there are no set qualifications that a coach needs to achieve to offer their services.
Debt advisors
Debt advisors work with people who are struggling to pay off debt. They help their clients to find ways to repay debt affordably and provide advice on dealing with the impacts of debt.
What are the costs?
Financial planning: a financial plan is usually a one-off fee of £1,500 or more, with the option of longer-term check-ups for additional fees.
Financial advice: the UK average is £150 an hour but this could vary from £75 to £350 an hour, or cost a set fee for a piece of work (which could be several thousand pounds), or an ongoing fee for regular check-ups.
Financial coaching: typically upwards of £60 an hour.
Debt advisors: many debt advisory services are available for free and a few of these services are listed on Maji.