15 Jan 2023

Coaching, planning and advice – what’s right for you?

What’s the difference between financial coaching, planning and advice?

This is not an “inside joke” for finance geeks, but it can cause a great deal of confusion for people seeking out help with their finances. January is a popular time to set financial goals and commit to becoming more financially organised, so let’s take a closer look at the different types of support available.

There are many types of financial adviser and different interpretations of what they all do. Some of the job titles you might find when searching for help include:

  • Independent Financial Adviser
  • Restricted Financial Adviser
  • Wealth Management Adviser
  • Chartered Wealth Manager
  • Chartered Financial Planner
  • Certified Financial Planner
  • Investment Manager
  • Mortgage Adviser
  • Money Coach
  • Financial Coach
  • Lifestyle Financial Planner
  • Financial Life Planner
  • Life Planner

That’s not even a complete list, so you can understand why people might feel a bit lost.

I’d suggest that, rather than focussing on job titles, try to understand what the individual or firm can actually do. Depending on your circumstances, you may need one or more of the following services:

Financial Advice

In its simplest form, this involves the recommendation of a specific financial product. An adviser will conduct a full assessment of your financial situation and make a personal recommendation from a particular provider. In most cases, they will also be able to set the product up on your behalf.

Financial advice involves a specific personal recommendation

This can be valuable if your financial needs are complex. It might also be appealing if you don’t have the time or inclination to take control of your own finances.

The cost of advice can sometimes be off-putting, though. It’s becoming more expensive for traditional, regulated advisers to provide a compliant service. Much of the cost is due to indemnity insurance, regulatory levies and administration.

In fact, less than 10% of the population receive regulated financial advice. It often comes down to whether or not you have enough assets to make it worthwhile. Many firms will only work with clients who already have £100,000 in savings, sometimes much more.

Having said all of that, research shows that most consumers who do take advice end up better off. Vanguard reckons it can add 3% a year to investment returns and a Royal London study indicated that advised people were, on average, £40,000 better off. You can read more in this article by Money for the Masses.

Financial Planning

It’s best to have a financial plan before receiving advice on a particular product. Planning is a more strategic exercise and actually, it’s the exciting bit! Well, at least it should be.

Financial planning

A good financial plan will capture your aspirations for the future. This might include your desired retirement age, or maybe a period of winding down at work as you get older. It might include a sabbatical, purchase of a new home, or a holiday of a lifetime. It could include starting your own business, paying for school fees or even your own care home fees later in life.

The possibilities are restricted only by your imagination. But the reality of it is brought to life with the actual numbers. A financial planner will usually use complex lifetime cashflow modelling software to crunch the numbers. This can produce a graphical representation of how likely you are to achieve the future you want.

Financial planning helps you understand which of 3 categories you fall into:

  1. Not enough: you don’t yet have enough capital to achieve the lifestyle you want for the rest of your life
  2. Just right: you have just the right amount to support your desired lifestyle up to a reasonable life expectancy
  3. Too much: you have too much money and risk dying with a big tax bill and not having lived life to the full

You’d be surprised at how many people fall into the 3rd category. But without financial planning, it’s very difficult to know that you have too much!

The challenge here, is that most people have not really defined what they want in the long term. We all have vague aspirations of what we’d like our ideal life to be, but without specific numbers, timescales and a plan, these are just dreams.

Financial Coaching

Where coaching can add real value, is by creating clarity about what you want from life. It can help identify your deepest values and life purpose.

Financial coaching

With this level of self-awareness, a vivid picture of your desired future can begin to emerge. Imagine the power of a financial plan, if it’s anchored to a clear picture of how you’d like the future to be.

Financial coaching can also be very practical on a day-to-day basis. Often, it will involve more mentoring than coaching. Work at this level can include education to help you understand more about your pension arrangements, investing for the future, insurances and spending plans.

Money coaching is a term sometimes used to describe work on the emotional side. We all have our own, individual beliefs, habits and attitudes to money. Quite often, these can be detrimental and self-limiting. So coaching can help address this.

You can read a bit more about money habits and attitudes in my blog here.


So, financial coaching, planning and advice could be seen as a sequence, where you gradually build up towards needing more complex help over time.

Something I’ve not touched on in this article is life planning. This is another branch of the financial services spectrum, which arguably, can be the most transformational of all. But that’s a story for another day.

If you have received financial advice in the past, ask yourself whether or not it’s linked to a financial plan. Do you know why you have the financial products, investments and pensions that you do?

If you’ve never engaged in financial coaching, planning or advice, think about making a start now. And if you don’t know where to start, try coaching first. If nothing else, a financial coach can help you work out where to begin!