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Coaching and Consulting: What's the Difference?

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Ray Sclafani’s ClientWise is a coaching business, so what’s the difference between coaching and consulting? Sclafani calls that his “favorite question.”

Sclafani told Investment Advisor‘s Jamie Green that when he founded his firm 10 years ago, “the only people who hired coaches were the underperformers or executives who needed help in interpersonal skills. But if you looked outside the financial services business, it was all the high performers who were working with coaches—all kind of coaches.”

The consultant is the expert who tells the client “here’s what you ought to do; here’s the answer, here’s the best practices,” Sclafani said. In other words, the consultant has “an agenda and tells the client what to do.”

The coach’s agenda, he said, is to “focus on each client’s genius,” to help advisors solve their own issues, first by prioritizing and then by “developing a structure that helps them solve their current issue” so that “when the next issue comes up, they can do it on their own.”

There are certainly times when a consultant is appropriate for an advisory firm. Sclafani mentioned compliance as a subject for a consultant, but when it comes to the “human capital piece or development work,” an advisor wants to “work with a thinking partner, someone who can evoke your genius and allow you to design and develop methods that are sustainable so you create your own thinking structures and design.”

He said the advisor industry is one where people are always looking for “the secret sauce, the silver bullet, the quick fix,” wanting to learn “the shortest way to get from point A to point Z.” But his firm, Sclafani said, is “not trying to sell stuff or trying to grow businesses fast. We’re trying to make a long journey,” tapping into the creativity that “lies within the uniqueness of each business.”

So is it as simple as a consultant gives a hungry person a fish while a coach teaches how to fish? Not exactly, Sclafani said. A coach helps you determine “whether you should even fish. Maybe you should hunt instead. Maybe you should hire a fisherman.” A coach works best when the advisor is “smart enough to know you need fish, but there are many different ways to accumulate fish. The difference is the partnering.” With a consultant, “the relationship is hierarchical; you hire them for their expertise. In coaching, it’s much more of a partnership of equality. The coach helps the coachee design, execute—you may even figure out you need to hire a consultant!”