What is financial coaching? How much does it cost? Is it worth it? That’s what we’ll figure out.
I feel like I could throw a rock and hit someone who works in finance. Based on the numbers, I’m not that far off. There are 6.3 million people working in financial services, 1.2 million working in insurance, and over 300,000 financial advisors in the US. If I have financial questions, should I talk with one of them?
Two problems, from my perspective, with talking to just anyone are commissions and AUM fees. Whenever commissions are involved, that often means there’s a motive to steer the client towards whatever product or solution pays the highest commission. Not ideal if you’re trying to get objective help. Whenever there are AUM fees, that often means the client will be put into a recurring revenue model and become reliant on the advisor in perpetuity – also not ideal.
And what about the fact that I have all the info in the known universe in my pocket? On my phone, I can access Google, YouTube or Investopedia to find the answer to most any financial question. Take that one step further: there are amazing fintech companies like M1Finance where I can get high quality investment management at no cost. Why wouldn’t I just take advantage of those resources?
Two problems, from my perspective. One: too much information is overwhelming and somewhat indecipherable. If I’m dying of thirst, I’ll take the firehose. But when I’m trying to be proactive about my finances, I’ll pass. Second: the world of personal finance is full of important nuance and intricacy. I believe most of us would benefit from the help of a professional.
Which brings me to financial coaching. According to US News:
“Think of a financial coach like a personal trainer, whose job is to help you discuss, establish and uphold positive routines,” says Julie Genjac, managing director of applied insights at Hartford Funds. Like a personal trainer who helps you understand your relationship with food and exercise, creates strategies to prevent your natural desires from derailing your efforts and encourages you to stick to your plan, a financial coach does the same for your finances.
There’s value in someone who can look at where you’re currently at, where you’d like to go, and help you close that gap. A financial coach can fill that need objectively, without a profit motive or recurring fees. Their job is to help you fix any financial problems you may have, learn, and set you on a path to independence.
The cost of working with a financial coach ranges from $75 to $600 an hour, according to Quicken, which is a big range. If you feel the coach you’re talking with can help you understand your finances and get you where you want to go, the peace of mind is worth the price.