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What does a Financial Counselor do?

By B. Miller
Updated Mar 02, 2024
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A financial counselor is one who works with individuals or couples to help them learn better personal financial management. This differs from the role of a financial adviser, who may also provide some form of debt counseling, but who generally offers clients advice regarding investments, retirement funds, and insurance policies, among others, and who may earn a commission off of these sales. A personal financial counselor may work for a small fee, or may even be free for those who qualify, and typically does not sell investment opportunities.

A financial counselor will meet with a client first in order to get a clear idea of his or her personal finances. The client should bring all relevant items such as bank statements, loan documents, credit card statements, tax information, and unpaid bills. The counselor will then take all of this information and determine the client's total debt amount as well as his or her net worth. The financial counselor may also run a credit report check to get information regarding current credit score and past credit history.

Once all of this information has been gathered and analyzed, the financial counselor will likely help the client to develop a payment plan in order to pay bills; some counselors may even be able to call creditors and work out a payment schedule, as long as the customer agrees to stop using the credit card. The counselor may be able to advise clients on which bills to pay first; for instance, one will want to pay any government taxes first to avoid garnishment of wages.

Debt consolidation is also common, in which the credit counselor will contact creditors to set up a payment schedule and then lump all debts into one; the consumer will then make one monthly payment to the credit counselor instead of to each individual creditor. Be careful when choosing this option, however, because this type of debt consolidation often requires destroying one's credit in order to consolidate the debt; interest rates are often very high as well. Be sure to select a non-profit consumer credit counseling service for debt consolidation, rather than a for-profit organization.

A financial counselor may work independently or as part of a larger financial counseling service. It is important for financial counselors to develop trusting and professional relationships with clients, who may one day offer referrals or return for additional financial counseling. Many people find this career helping others to manage finances and pay off debt to be very rewarding.

PracticalAdultInsights is dedicated to providing accurate and trustworthy information. We carefully select reputable sources and employ a rigorous fact-checking process to maintain the highest standards. To learn more about our commitment to accuracy, read our editorial process.

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