Financial Guidance

There is a fine line between giving guidance to a client and providing advice. The distinction between these two words – guidance and advice – is vitally important. It is imperative that financial coaches understand the full scope of this distinction when working with clients.

Guidance is the foundation of what financial coaches do. Guidance represents the process of assisting clients in need of financial direction through various means. This process may include understanding their needs, directing them to educational material, helping them with activities, assisting them to prioritize objectives, offering options, or providing education and direction to help them with their stated goals. Guidance can also include building a roadmap for a client, to help him or her down the path toward financial wellness. It can even include listening to clients and offering affirmations to confirm that they are doing the right (or wrong) thing.

Financial Guidance Outlined by NFEC

To clarify what is meant by financial guidance the NFEC developed this financial guidance definition:  “Sharing expertise and directing clients toward resources and education that can help them make decisions based on their personal goals. Financial guidance is the act or process of pointing clients through education, research, reflection, and other ways to help them make their own decisions.”

It further illustrates that both advice and guidance are given by someone regarded as knowledgeable or authoritative. Advice is providing specific recommendations for specific action to be taken. Advice is an opinion or recommendation offered to direct action or conduct. While financial guidance is sharing expertise and directing clients toward resources and education that can help them make decisions based on their personal goals.

Financial Guidance or Advice

The NFEC Coaching Certification Guidelines are divided into three main sections, each of which plays a separate but pivotal role in ensuring that coaches provide the best possible financial guidance and service to their clients. These three sections outline ethical standards, practice standards, and professional standards.

One area it play close attention to is separating guidance from advice. Financial advice goes well beyond guidance in that the financial professional (not coach) provides actual recommendations upon which the client should act. The adviser does not implement the actions, but do the legwork to process the client’s information and come to a suitable recommendation. The right to give financial advice requires extensive experience and accreditation, experience upon which the advisor draws to give proper recommendations.

The process of giving financial advice typically does include some level of guidance. However, guidance should never include advice. The essential definition of guidance is that the decision is left up to the client, given the information you make available to them.

A clear line is drawn on advice that concerns investments, legal, tax, financial products, and other situations where other jurisdiction is responsible for oversight. No advice can be given in any of these instances. Legal and ethical responsibilities in these cases are governed by other industries and your actions may be in violation of their rules. The consequences of giving advice in such instances can range from fines and public exposure to jail time.

Additional Financial Guidance Information

National Financial Educators Council (2020) Financial Guidance Survey

Certified Financial Planner ® Board of Standards, Inc. (2017). Continuing Education Policies. Washington, DC: CFPBS.

Federal Trade Commission (2006). Financial Institutions and Customer Information:  Complying with the Safeguards Rule. Washington, DC: FTC.