Here's what a financial coach does, and why they may be the best option for those looking to manage their own money

• Although their titles sound similar, financial planners and financial coaches play different roles in helping clients make informed decisions about their money, says Financial Coach Katie Oelker.
• Financial coaches help their clients take control of their finances based on their current situations and goals.
• Financial planners, on the other hand, take an investment route that may not always be beneficial depending on the financial circumstances.

Most individuals have heard of financial planners, but few have heard of financial coaches. Understandably so, as financial coaching is a newer industry that is mostly unregulated at this point. That being said, there are huge advantages to working with financial coaches, but it's important to understand who they serve and when to utilize their expertise versus working with a financial planner.

Financial planners

Meeting with a financial planner can be completely overwhelming for a lot of individuals. Many are embarrassed to open up about their situation, especially if they struggle with debt or are living paycheck-to-paycheck.

Financial planners also focus on the investing side of personal finance as they are typically paid off the fees on investments (unless they are Fee-only Financial Planners). Most also are licensed to sell insurance products, and thus individuals can purchase life, disability and Individual Retirement Account products from financial planners as well.

But what if you're struggling with managing debt, living paycheck-to-paycheck, or saving up enough money to actually start investing or afford the insurance you need?

That's where Financial Coaches come into play.

Although there are Financial Planners that can help with these things, many do so with the hope that you will ultimately invest with them or purchase some insurance products in the meantime.

Financial coaches specialize in helping their clients organize their finances, create budgets, and make a plan to pay down debt and save more. They typically only work with individuals on a fee-based advice model and don't sell insurance or investment products.

Here is an example of the steps Financial Coaches take their clients through:

• Meet with the client(s) to assess their current financial situation and understand their financial concerns and goals.
• Put together the action steps needed to reach these goals.
• Come up with a game plan as to when the action steps will be completed and what type of support/accountability will be needed.
• If they don't already have one, set up a tracking/budgeting system for the client(s) so they can determine where their money is going and how to free up more of it to pay off debt and save money.
• Check-in with clients several times per month to gauge progress and adjust the plan if needed.

Clients typically work with financial coaches for several months up to a year, although there are definitely cases where they work together for longer or shorter time periods. If after working together they need more guidance on topics such as specific investments to choose, college savings, or advanced tax planning strategies, then this is when it would make sense for them to meet with a financial planner who can then take them through the next stage in their goals.

Financial coaching and financial planning are two completely different industries that each bring unique value to their clients. If you struggle with getting your finances organized and meeting your short-term financial goals however, financial coaching is a great place to start.

Katie Oelker is a financial coach, personal finance writer, and member of BI's Money Council.