Financial coach vs financial adviser – what are the differences?

For most people, financial planning is about creating a better life for themselves and their families and giving them peace of mind. It can also help to answer some of life’s most pressing questions, such as when you’re likely to be able to afford to retire and how much money you’ll have to spend.

When it comes to deciding which financial service is right for you there are lots of options, from a comprehensive service to advice targeted on a specific area or question. There’s now a third option too, financial coaching. This provides education rather than specific financial direction. It can be invaluable for those requiring good-quality, trustworthy information to aid their decision making but who don’t require regulated, more formal advice.

Financial coach vs financial adviser: what are the differences?

Financial advisers are regulated by the Financial Conduct Authority (FCA) to give advice and recommendations on certain products or courses of action. This can either be focused on one particular area or it can take a ‘holistic’ view to explore all aspects of your financial world, taking everything into account to create a plan that matches your individual needs, objectives and risk appetite.

In contrast, a financial coach cannot provide specific recommendations and their services are not regulated by the FCA, but they can inform and empower. They do this by giving you the confidence to make your own decisions to meet your financial goals through setting priorities and providing support and motivation.

Coaching can be a more affordable and accessible alternative to traditional, regulated financial advice for those that require education rather than specific direction. There is no minimum level of assets, as there often is to make full financial planning worthwhile, and they can be great value because the fee is usually on a ‘pay as you go’ basis calculated on the amount of time spent. Although still quite new, coaching could have a significant role in closing the ‘advice gap’. This refers to the large number of people who require, or would value, additional financial knowledge but find themselves excluded from a comprehensive, regulated service due to cost or because they don’t have the minimum level of investments needed to access these services.

What does a financial coach do?

• Aids your understanding of financial topics to improve your decision making
• Answers your specific questions to help you put together your own plans
• Discusses the pros and cons of different products if applicable but can’t recommend a specific one
• Helps anyone, whatever their situation or level of wealth

What does a financial adviser do?

• Regulated by the FCA to recommend products and solutions

• Able to answer specific technical questions

• Offers a range of planning tools and techniques based around areas such as tax-efficiency, retirement, inheritance tax or protecting wealth
• Can build a comprehensive financial plan that’s specifically designed to meet your needs

When should you consider financial advice?

For those with relatively straightforward circumstances it’s usually possible to take a DIY approach or receive guidance or coaching when taking decisions. However, the more complex your affairs, the more you may require specialist expertise and the greater value it can add.

Pension planning is one example of this. Pensions can be complicated, and many of the decisions taken around retirement are one offs, and they are sometimes impossible to reverse. The sums of money are often large, so you really stand to benefit from comprehensive advice to get your strategy right first time.

You should also consider this type of advice if you’ve received a large sum of money – perhaps from your pension, an inheritance, settlement or business sale – and you want to work out how best to organise and structure your wealth. Similarly, if you want detailed advice relating to inheritance tax planning this is likely to be the right level of service for you.

How do the costs compare?

• Typically, Charles Stanley only provides full, holistic financial advice to those with assets over £200,000. As part of this comprehensive service you’ll benefit from a range of planning tools and techniques so you can be more tax-efficient with your savings, plan your retirement, mitigate inheritance tax, protect your wealth and much more.

• Alternatively, you could consider one of our Financial Plans which provide streamlined advice around a commonly asked financial question for people with non-complex needs. For a one-off fee of £900 a qualified and regulated adviser will help you understand your current situation and give you a clear action plan.

• The format of Financial Coaching is even more flexible. It allows you to guide an educational session based on the topic of your choice so you can get the most out of it. We offer a free, no commitment, 15-minute call with a qualified professional to discuss your needs. Each one-hour coaching session is then charged at a one-off fee of £150 (including VAT). Importantly, all our coaching is provided by regulated and qualified financial planners who work for a regulated company. Not only will you benefit from more formal experience and qualifications, but if your financial coach believes you would benefit from more comprehensive guidance, or even full financial advice, they will refer you to an advisory service.