Back in my high school and college days, I had the good fortune to swim under some very good coaches. Good coaches encouraged and trained me to accomplish things I did not think were possible until after I did them. As my mindset changed, it became easier to excel.

Surely you’ve heard the story of Roger Bannister. In 1954, he was the first human to break the 4-minute mile. He ran the mile in 3:59.4. Scientists and experts had said that such a feat was impossible without your heart exploding.

Then within 46 days, a competitor from Australia named John Landy beat Bannister’s record running it in 3:58.0. Then a year later, three more runners broke the 4-minute mile. As of June 2018, 1497 humans have broken the 4-minute mile.

Bannister’s accomplishment showed that the 4-minute mile was not only possible but was inevitable. Someone just needed to be first to break the mental block.

Personal finances – particularly budgeting – can seem like a 4-minute mile. Having a coach enabled us to see that other people have not only survived, but thrived, as a result of having a budget.

The best athletes in the world all have coaches. Roger Bannister had Franz Stampfl. Tiger Woods had Butch Harmon. Michael Jordan had Phil Jackson.

What does this have to do with financial coaching? Millions of ordinary folks have built extraordinary wealth using financial coaches. (They’re the ones who become Everyday Millionaires!)

Financial Coach vs. Investment Advisor

If you’ve read this far, you may be wondering, “What’s the difference between a financial coach and an investment advisor?” or “Don’t I need an investment advisor?” The short answer is yes… at the right time!

I will explore this question in the context of the Baby Steps. A Ramsey Solutions Master Financial Coach typically helps clients get to Baby Step 4 (Invest 15% for Retirement). Getting this far takes about 24 months on average.

At this point, the coach may recommend an investment advisor, because these individuals are licensed to give advice on securities. But investment advisors are more expensive that financial coaches. Why? Licenses and liabilities for starters. And it’s probably all they do.

Most coaches help as a side hustle. I have a day job I love. But I don’t give up time away from my family without being remunerated. With the exception of the exploratory conversation… so call me at 570-731-0425!

Many financial coaches (including me) advocate do-it-yourself retirement investing, because it is simple to get started, and the price is right. Of course, this is done with the disclaimer “I’m not an investment advisor.” I merely provide educational content, and share what I’ve done. Do your own due diligence.

(I be reviewing lots of personal finance books in 2021.)

So investment advisors (also called financial advisors) come in two flavors — fiduciaries and representatives. Some are both, so beware…

In short, a fiduciary is a “fee-for-services” investment advisor who helps people make investing decisions based on their stage of life. They are duly licensed.

An investment advisor will at least have written the Series 65 exam which licenses him or her to charge fee for advice on securities. Then they might become listed as a registered investment advisor, or RIA. But they cannot sell securities with just the Series 65 license. They are a “fee-for-services” purveyor of financial securities advice.

Investment advisor representative (IARs), or brokers, may also function as fiduciaries if they are dually certified. But they also obtain a Series 6 or 7 license with the SIE (Securities Industry Essentials and Series 63 licenses enabling them to sell securities. When obtaining a Series 7 license, some may opt for the Series 66 license that includes content of the Series 63 and Series 65 exams.

There are different groupings of exams for different jobs, and the exams are all administered by FINRA (Financial Industry Regulatory Authority).

In short, representative brokers can earn money when clients buy and sell securities for the company that they represent. Retirement savings does not require trading, except for re-balancing your portfolio once a year. (And when done inside my IRA, I pay no trading fees.)

So as we transition further into the new year, I will be talking more about my financial coaching business, my upcoming free courses, to help you, and how I would be able to serve you. (I am considering a straw poll on whether I should pursue becoming a licensed investment advisor, not a representative).

So stay tuned!

Source: Investopedia, A.D. Banker & Company, and QuickenLoans.