4 types of financial helpers: which is best for you?
Whether facing a mountain of debt, a flurry of tax papers or just needing budget advice, there’s someone out there who can lend a helping hand. But with all the different types of financial professionals out there, sometimes it’s hard to figure out just who can help with what.
Financial practitioners can assist people with just about any money situation. The specialties of these individuals can overlap, and some folks fill more than one role, so it’s important to know who to call when you’re in need. The four types of financial helpers listed below cover a lot of bases.
Daily Money Manager
- Offers practical, day-to-day money management assistance
- Often works with senior citizens and the disabled
- Best for anyone not able to keep track of their finances
- Focuses on emotional, behavioral, psychological roots of money issues
- Looks back at client’s family history to understand financial situation
- Best for extreme spenders, couples in conflict over finances
- Helps clients achieve life goals through better money habits
- Teaches how to use budgeting tools, spend wisely
- Best if you’re saving for a dream house or just want to be debt free
- Certified to advise clients on investing, saving, growing money
- Can specialize in retirement or estate planning
- Best if you’re about to retire or want to build an investment portfolio
1. Money managers: Your
personal financial assistant
Staying on top of financial affairs can be a lot of work, depending on how big your family is, what you own and what kind of lifestyle you lead. Bank and credit card statements, tax forms, bills and other important documents constantly jostle for our attention. Many elderly, disabled and seriously ill people lack the physical or mental energy to keep up with all the paperwork and red tape. That’s where daily money managers come in.
“Daily money managers help people deal with their day-to-day finances in a very practical way,” said Leah Nichaman, founder of Everyday Money Management and incoming president of the American Association of Daily Money Managers. “We are focused on people’s bills, their mail, their files and helping them get prepared for or get through tax season.”
Senior citizens can also be vulnerable to financial exploitation and identity theft, particularly with the advent of online banking and other digital financial tools.
“A senior citizen might not be able to look out for themselves in this regard,” she said. “They may not be tech-savvy, they may be forgetful and they may be inclined to get confused and give information over the phone. A daily money manager is right there on the front line trying to prevent that. If our client has their identity stolen, a daily money manager is right there helping them to get that fixed.”
Daily money managers aren’t just for the elderly and the disabled. Nichaman said they can also serve high school or college students, deployed military service members, young couples or people who are just disorganized or very busy. Modern life is full of distractions, and it can be easy to take your eye off the ball with your finances.
“I think we have an epidemic of inattention to our finances in this country,” Nichaman said. “Because we’ve managed to automate so much, it’s hard for us to pay attention. Even when your bank sends you an e-mail that says your statement is ready to be viewed, you may not click on that.”
I think we have an epidemic of inattention to our finances in this country.
Founder of Everyday Money Management
Nichaman said a daily money manager serves as a personal assistant for your finances — reading bank statements and looking at credit card, checking and savings account data to make sure nothing’s amiss. Daily money managers can work with clients in person or remotely and on a limited or open-ended time frame, depending on their needs. Nichaman said daily money managers can charge anywhere from $50 to $175 per hour, depending on the geographic region and the types of services provided.
Daily money managers are not regulated in any state, but there is a voluntary certification exam they are eligible to take after 1,500 hours of service. In addition, the AADMM has a 14-point code of ethics that states how daily money managers should behave and treat their clients.
2. Financial therapist:
Getting to the root of the problem
Some money problems go deeper than a lack of organization or inattention to detail, and they can take a toll on a person’s well-being and relationships. Detrimental behaviors, such as an extreme shopping addiction, often require personal counseling, and a financial therapist can help.
“I think the traditional planning field is coming to realize that there are some true complexities that exist regarding people’s emotions, feelings and behaviors around money,” said Megan Ford, president of the Financial Therapy Association. “It’s not simply developing a plan and having the implementation of that plan go well.”
Ford said financial therapy typically explores events in a client’s past to understand how those events form his financial behavior as an adult. A person raised by extremely frugal parents, for instance, could become an excessive spender at the first taste of financial freedom. Conversely, someone who grew up in a spendthrift household could grow into a tight-fisted adult. These attitudes aren’t necessarily wrong, but they can cause conflict in relationships with spouses and significant others. Ford said financial therapists often specialize in helping couples resolve money issues.
Financial therapy is a relatively new field, so there are currently no formal certifications. Ford said many financial therapists, however, are either certified financial planners or licensed mental health professionals — or both.
“If they have a home base in one discipline or the other — which many financial therapists at this point do — they follow their own ethical and practice requirements set forth by whatever certification or licensure they currently hold,” she said.
Ford said financial therapists who work in private practice can charge anywhere from $100 to several hundred dollars per hour, and some insurance plans may cover all or part of their fees.
3. Financial coach: A
If you’re not in dire straits but would like to develop better spending habits, reduce your debt or maximize savings, a financial coach may be for you. Matt Kelly, who owns Momentum Personal Finance Coaching in Durango, Colorado, said a financial coach can help clients better use budgeting tools to identify and correct spending imbalances. His approach involves asking his clients what their life goals are and helping them change any money habits that are getting in the way of those dreams.
“The ultimate goal for me is getting my clients more of what they want,” Kelly said. “That often starts with helping them get clear about what it is that they want.”
The ultimate goal for me is getting my clients more of what they want. That often starts with helping them get clear about what it is that they want.
Owner, Momentum Personal Finance Coaching
Even minor spending problems can hinder a person’s ability to achieve broad financial goals, and a coach can offer advice on how to cut back. Bigger issues such as an overload of credit card debt can be resolved through a systematic approach such as a payment plan. Kelly said mismanagement of credit cards can lead to what he calls “unconscious spending.”
“I coach from the perspective that debt and unconscious spending steal our dreams,” he said.
Kelly said his clients typically spend about eight hours over a period of three to six months in one-on-one coaching sessions. An additional 40 hours are spent on personal tasks such as preparing a debt payoff worksheet, developing a monthly budget and even decluttering one’s home. Kelly’s goal is to help the client get debt free — except for large installment loans and medical debts — within 12 to 18 months.
Kelly said the costs to hire a financial coach vary, but he charges $500 for four hours of one-on-one coaching. He also offers a self-guided course that costs $197 and is supported by a Facebook group.
Currently, there is no license to become a financial coach. Kelly said it’s critical for financial coaches to know their limitations and not try to do the work of a certified financial planner or a financial therapist.
“There’s crossover between what a therapist might discuss and what I might discuss,” Kelly said. “As soon as it’s obvious that this is a psychological issue that requires some type of therapist … they need to refer out.”
4. Financial planner:
Preparing for life’s big moments
If you’re looking for a qualified professional to help plan for a major life event, invest money or secure your finances in retirement, consider a financial planner. Financial planners are board-certified and can specialize in different areas, including education, retirement and estate planning, insurance and personal taxation.
Eleanor Blayney, consumer advocate for the Certified Financial Planner (CFP) Board, said CFPs can advise clients on things such as selecting a retirement account and how much to invest in it, tax-efficient transfers of wealth and what kinds of insurance to buy. Blayney said there are areas in which financial planners overlap with other practitioners such as financial coaches — they can help clients meet budget targets and solve other money problems, for instance.
“The lines are not clearly drawn,” Blayney said. “The brightest line is that a CFP professional has been qualified by a certification with expertise in a variety of subject matters. While there are courses for coaching, it’s less precise.”
Financial planners typically do not tackle behavioral and emotional issues, but they can be trained in behavioral economics.
“This is more the generalized observations of how people behave around money — not individual therapy,” Blayney said. “It’s identifying the shortcuts that people take in their head.”
CFP certification is built on the board’s “four Es” — education, examination, experience and ethics. Applicants must take a board-approved curriculum, pass an exam and accumulate 6,000 hours of experience (or 4,000 hours as an apprentice to another CFP). CFPs must also follow a strict code of ethics and meet requirements for ongoing education.
Financial planners can charge $125 to $350 per hour, or between 0.5 and 1.25 percent of a client’s assets if they work on a commission basis, according to the National Association of Personal Financial Advisors. A flat-fee, comprehensive financial plan could cost up to $5,000, but many charge much less.
Financial helpers come in many different forms, and they can be very effective at solving life’s most pressing money issues. There’s no shame in getting hands-on assistance and a fresh perspective, particularly if money is major source of stress in your life.
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