There are a lot of resources out there for financial information, guidance and advice from websites to talk shows to books and magazines. There are also many professionals that are in the business of providing personal financial help; however, they may be called different things, such as, a financial advisor, coach, counselor, consultant, educator, mentor and planner. Some sell investments and other products such as books and memberships for future service, and some sell advice. Some don’t sell anything at all.Some work for non-profit organizations and others for financial services firms. Some work for themselves.Some are licensed, and some have a lot of initials after their names. Some have no obvious qualifications.
So what is the difference and how do you know if that person is the right one to turn to for help? To start, here are some brief descriptions to help clarify their roles.
Advisors, Consultants and Planners
Financial advisors, consultants and planners can help you to make a plan for the future, usually addressing several areas of a person's financial situation, including budgeting, insurance, investing, retirement planning, taxes and estate issues. They may suggest certain financial products or investments that could help you reach your goals. Advisors, consultants and planners may sell the financial products they suggest, including stocks, bonds, mutual funds, insurance, etc.; however, they must be licensed to offer investment advice or sell financial products.
Counselors
Financial counselors can be described as problem solvers, providing analysis, information and options for possible solutions to a specific financial issue. Counselors present alternatives and outcomes but do not sell products or give specific investment advice.Financial counselors may specialize in areas such as credit or housing counseling.Financial counseling has no formal education or licensing requirements; however, specialized areas may have certain federal or state requirements for their counselors.
Educators
Financial educators provide information only. Educators provide facts about personal finance topics, which may include the basics of budgeting, saving or credit, but may also include more advanced topics of financial products, retirement planning, tax code and bankruptcy. Educators do not provide specific advice as to what may be appropriate for your individual situation. Just like financial counselors, educators have no formal education or licensing requirements; however, agencies or companies may have certain requirements for their educators.
Coaches
Financial coaches are similar to financial counselors but also focus on reaching long-term goals. Coaching relationships are usually longer term than counseling and can be thought of as a cheerleading approach. Financial coaches may also engage in selling non-investment products, such as books, wealth building “systems” or even training services to become a financial coach yourself, as a way to supplement your income. Again, coaches do not have formal education or licensing requirements.
Mentors
Financial mentors are also similar to counselors and coaches but with the approach of “I did it and so can you!” Mentoring takes the coaching relationship one step further with the mentor being seen as the expert. There is no formal definition of what it means to be an expert in the financial advice, coaching, counseling, consulting, education and mentoring areas. Expertise can come from a variety of sources: formal education, professional designation, licensing or experience; financial mentors do not have any of these as requirements in the field. Caution should be taken when deciding if someone could be considered an "expert."
When seeking any type of financial help, there are many questions you should ask of the potential provider, such as the type of services offered, their qualifications, cost, etc. See 10 Questions to Ask for more information and downloadable checklist.
