Financial Coaches

Anyone can call themselves a financial coach. That's both a strength and a weakness.

The difference

If you receive regulated advice you are protected by legal redress against your adviser's firm and by the certainty that your adviser has appropriate training and qualification as specified in the regulations. IFAs are regulated advisers (otherwise they can't call themselves IFAs).

A regulated adviser is allowed to direct you to specific products - e.g. the SuperhotAllShareEquityFund managed by Croesus Investors (we made that up). But an unregulated adviser can discuss your financial issues and suggest a range and spread of asset types into which you might put your savings. And maybe that's all you want. And you won't have the problem of wondering if Croesus and your adviser have a relationship.

(Disclaimer: the precise rules about what is regulated advice and what is not is contained in a Regulation Handbook that no ordinary human being should be expected to read, and we certainly haven't.)

Unregulated advisers often call themselves 'Financial Coaches'.

The problem

The trouble is that regulated advice is expensive compared to unregulated advice. Training and qualification is expensive, legal protection insurance is expensive and the procedures demanded by the regulator are expensive. So the phrase 'regulated' has begun to mean 'expensive and complicated' in the minds of potential customers. And the designation 'Financial Coach' has begun to mean 'low cost advice that I am likely to understand'.

So the designation 'Financial Coach' is beginning to offer a marketing edge. Which means that regulated IFAs have begun to use the phrase in their literature to attract a different market and to score with the online search engines.

Further, others in the financial services game have begun to offer financial coaching, e.g. brokers. They can't give you financial advice but there's nothing to stop them recommending an adviser. Do you think that will be an unbiased recommendation?

It's a minefield out there.

Our advice

If unconflicted coaching is what you want, do your homework on your prospective provider. Don't automatically assume it is cheap. Understand its charging structure. Ask about its commercial relationships.