The terms for investment coach, financial coach, and financial advisor can be confusing.
What is an investment coach exactly?
An investment coach is someone who helps others invest. On the other hand, general financial coaches can help with a variety of financial topics, including debt management, while the term financial advisor usually refers to someone who invests for you.
Many people are confused by the roles investment coaches play. As an investment coach myself, most people think I will invest for them.
That’s not what a “coach” typically does.
In this post I’ll address:
- The issues an investment coach can help you overcome
- What to look for in an investment coach
- The problem with using a financial advisor as a financial coach
- The best type of investment coach
Let’s get started.
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Should You Use an Investment Coach?
It depends on what you need as to whether or not you should use an investment coach.
It also depends on who the investment coach is. Who the investment coach is will generally reveal what the investing coach is teaching about investing to their clients as explained in more detail later in this post.
Broadly speaking, however, an investment coach can help you:
- Improve your cash flow so you can increase the amount of money you invest
- Understand investing
- Feel more confident about investing
- Create and implement an investing plan
- Stop making the same mistakes when investing
- Become knowledgeable about the various ways you can invest
- Help you choose an investing method that aligns with your skills, wants, and net worth
If you need help with any of this, then yes, the right investment coach can help you.
Very few investment coaches do the last two items on the list above, however. The reason is addressed in the next section.
Is an Investment Coach a Financial Advisor?
First, note that in this post, like most people, I’m referring to someone who invests your money for a fee as a “financial advisor”. Financial advisors usually charge fees ranging from .75% to 2%, but 1% is a good average these days for astute investors to pay. (I’ve had some investment coaching clients paying financial advisor fees well over 2.30% when they first came to me!)
Having clarified that, let’s get back to whether an investment coach should be someone who invests for you, AKA your financial advisor.
Here’s the thing: Most people who call themselves investment coaches are really financial advisors as their primary role.
This can work okay for clients who want help with personal finance issues such as budgeting, debt management, and cash flow as long as you know their primary revenue comes from investing for clients.
Using a financial advisor as an investment coach can be problematic when it comes to investing, however, because financial advisors acting as investment coaches can’t possibly be objective.
Here’s the other problem: only teach about one way to invest. You can probably guess they only teach the way they invest for their clients because this is what they know and do.
Let me share a little analogy that explains the problem with this.
Let’s say you’re going to buy a new car and you’re completely unaware of the variety of car brands except for Nissan.
But a smart car buyer wouldn’t only go to a Nissan dealer to look for a new car, he just doesn’t know what he doesn’t know.
If he did only go to Nissan, he wouldn’t have any idea how a Nissan compared to a Toyota…or a Tesla.
He couldn’t measure the results from a Nissan accurately because he wasn’t aware of other options.
It wouldn’t be his fault, of course; he didn’t know about Toyotas or Teslas because he was completely unaware of other car brands.
And he was certainly learning about the benefits and how to use cars from a knowledgeable car expert at the Nissan dealer.
But he was only learning about Nissans from someone with a completely biased perspective because this guy had been selling and driving only Nissans for over 20 years.
Similarly, if you learn how to invest from an investment coach who also provides investing services, you won’t be aware of your options.
You would be making an expensive decision with very limited information. (And choosing an investing method is way bigger than choosing a car!)
Unfortunately, this is what most people do simply because they aren’t aware they can hire an independent investing coach who teaches the different ways they can invest. This would allow them to choose the method that works best for them.
Independent Investment Coach
My advice is to seek an independent investment coach, not one that invests for clients, and not one that works at a large financial firm, such as a bank or brokerage firm. They will have an agenda.
You want an investment coach who can be and is unbiased.
An independent investment coach can inform you about the different ways you can invest and help clients choose the best method (or advisor) for them based on their unique situation.
Having clarified this, most independent investment coaches still teach one investing method: how to invest in index funds following a standard asset allocation model. This is the same model taught in the courses required for my current Accredited Financial Counselor certification (and my studies to become a CFP) but real life investing has taught me, oh, so much more!
I have used numerous investing methods over the decades, including hiring financial advisors to invest for me before I began doing my own investing once again over 15 years ago.
This means I can inform my investment coaching clients of the pros and cons of using a financial advisor based on my own experience and, in an unbiased way, having used multiple advisors that even used different investing methods among them.
I can also teach how to invest like most financial advisors invest for my investment coaching clients who want to invest themselves.
Having bought rental properties over the years, I can also teach about this for my clients who are curious about it.
I’ve bought thousands of shares of stocks, invested in individual bonds, sold hundreds of covered calls, managed mutual fund and ETF portfolios, established income streams from online business, and even angel invested so I’ve invested in a lot of different ways over the decades.
Most people seeking an investment coach, however, simply want to become more informed and better investors of a diversified portfolio of stocks, bonds, and maybe some commodities or real estate funds added to the mix. This is what I help clients with most often.
Next, let’s address what all to look for specifically in an investment coach.
What to Look for in an Investment Coach
Look for someone who meets the criteria below when seeking an investment coach:
- Is not attached to one single method of investing, a large firm, strategy, or product
- Is knowledgeable about and experienced in various investing methods
- Experienced investing during both bull and extended bear markets
- Experienced investing in methods that might interest you, such as fixed asset allocation, various fund types, various asset classes, individual securities, tactical, value, growth, dividend, etc.
- Experience investing in alternative assets such as real estate or small business (privately) if this interests you
The Difference Between a Financial Coach and an Investment Coach
You may still be wondering if a financial coach is also an investment coach. The term financial coach covers a broader range of potential topics than an investment coach.
Many financial coaches focus on:
- Eliminating credit card debt
- Establishing positive cash flow
- Budgeting
You’ll want to find a financial coach that specializes in the area of expertise you want to improve.
The terms financial coach and investment coach can overlap. For example, while I usually refer to myself as a financial coach, I am really more of an investment coach because investing is my area of expertise based on my experience and the focus of my work.
Do Investment Coaches Tell You Where to Invest?
Investment coaches don’t tell you where to invest unless they are licensed specifically to do so; in this case, they would be “financial advisors” who invest for you.
As an investment coach, my role is to empower investors with unbiased information so they can decide for themselves where to invest. This approach allows investors to make wiser decisions about where and how to invest. It also increases confidence.
Working with an Investment Coach
Who you listen to can have a huge influence on the results you get.
The investment results you get determine the amount of money you make from your investments.
The amount of money you have will likely make the largest impact on whether you can live your desired lifestyle.
Therefore, working with an unbiased and experienced investment coach with expertise in the area that interests you can be smart.
Note that investment coaching fees are usually a fraction of fees paid to a financial advisor every single year. An investment coach can help you decide whether to work with a financial advisor and choose a top advisor, or even invest yourself, thereby saving thousands each year that can be kept in your investment account to compound.
If you want to learn more about how my investment coaching works, you can do that here.
