92: Coaching vs Therapy: Which Makes the Most Financial Sense?

 
 
 

I got a great question about the earning potential for coaches versus therapists in my inbox. The subtext of the question was, "why become a therapist when coaches earn more?" So I wanted to answer that question with some nuance and decided to talk about it here. I posed this question to my Instagram community and got a ton of thoughtful feedback there, too. 

For this podcast and accompanying blog post, I'm going to break down the differences between therapy and coaching, the type of coaching that gives me the heebie-jeebies, and why people are so convinced that coaching is the only way to make money (and hopefully debunk that too). 

Coaching vs. Therapy

Coaching and therapy have a lot of similarities. Positive psychology is in both professions, along with a focus on a person's potential and the inherent worth of humans. I used to see more people separate coaching and therapy by the "time" or "tense" of the work. As in, coaching focuses on the future, whereas in therapy, the focus is on the past or present. Like most things, I think the differences are much more nuanced than the "tense" of the work.

I looked into what two large therapy entities, Social Work and the Marriage and Family Therapy Association, had to say about therapy vs. coaching. I peeked into what the two large coaching entities, the International Coach Federation (ICF) and the International Association of Coaching (IAC), thought about the similarities and differences. But, of course, since this is my podcast and blog, I'll be sharing my thoughts as well.

First and foremost, coaching is not regulated by the government. That means while there are organizations that require training and exams for coaching, anyone can call themselves a coach. This means defining coaching is up for debate. The ICF strongly emphasizes clients' future development and their professional and personal growth. The IAC is different, sharing that coaching focuses on personal awareness, growth, and discovery. 

While both the ICF and IAC make it clear that coaching is not therapy, there's still a lot of fuzziness in the definition, which could lead to consumer confusion over what they are signing up for when they work with a coach. 

I've summarized my findings and interpretations of the differences between coaching and therapy in the chart below. I cover each profession's training, topics that can be covered in session, confidentiality, fees & payment structures, client-coach or client-therapist fit, and the duration of services.

Mental Health Coaching vs. Therapy

Earlier, I shared a subset of coaching that automatically puts me on edge. And that's any type of mental health coaching. While well-intended, whenever a coach offers a mental health diagnosis "coaching," it can be difficult for the client to differentiate between coaching and therapy. It becomes murkier still when coaches use buzzwords that contain potential diagnoses, like "trauma coaching," "anxiety coaching," or "ADHD coaching." 

I don't believe in gatekeeping information. Plenty of ethical coaches can help their clients with specific mental health struggles. When it comes to addressing trauma, there is tremendous value in more people having access to a greater understanding of what constitutes trauma. I fear that a client in duress may turn to a coach when an actual mental health clinician and medical intervention would be more appropriate. 

Can a Therapist Be a Life Coach?

Of course, therapists can do coaching on the side of their practice or move from providing therapy to offering to coach. For therapists who practice both therapy and coaching, there should be clear boundaries and differentiators in each of those practices. Clients should not move between being a therapy client and a coaching client. And, coaching clients should never be under the impression they are participating in therapy even if their coach is also a therapist. 

When it comes to therapists who've left the field for coaching, the three common reasons are:

  • Income potential

  • Greater control over the clients they work with

  • More room for creative expression in their work

Some cite a greater earning potential when they don't have to be bound by the finger-wagging that comes with charging sustainable rates. Others say they were burned out at agencies and organizations that overworked them and had them working with clients who weren't the best fit. Still, others cited generally feeling boxed in when working as a therapist. 

The Cost of Becoming a Therapist vs. a Coach

To get a certification in life, career, or other types of coaching, you can expect to spend between $3,000-10,000. The length of time can also vary but is generally between 3-12 months. A coaching certification comes with training, a number of hours practicing coaching skills, and often sitting for a test or exam. 

Something is compelling about a person who coaches and says, "fuck traditional education. I know in my bones, in my soul that I can help people with X and can and will do it ethically." I've seen many fantastic liberation, equity, and justice coaches that help individuals and organizations change in beneficial ways. I love seeing coaches help clients with negotiations, selling, identity, business, and finance, too!

The cost to become a therapist also varies, but it is between $50,000-$200,000. Between a four-year undergraduate degree, a Master's degree, or pursuing a Ph.D., it can easily be several hundred thousand dollars to become a licensed therapist. Once grad school ends, the therapist will have to go onto an internship or limited license period and accrue between 2,000-4,000 hours of supervised clinical experience. Then, they have to sit for their boards or exams to become fully licensed. Upon full licensure, they must maintain their license with ongoing continuing education and license fees. 

There is so much gatekeeping that happens in traditional therapy and higher education. Not only is becoming a psychotherapist a financial investment and a barrier, but many of these institutions exist within racist and patriarchal systems. How these higher education systems are designed can make it harder for people of marginalized identities to access learning. 

How Much Does a Therapist Make?

How much a therapist makes per year ranges wildly. To illustrate this picture, I turned to Google and asked Zip Recruiter what an MSW makes in Michigan when traditionally employed vs. when in Private Practice. According to Zip Recruiter, $51,437 is the average salary for an MSW in Michigan, and $72,000 is the average an MSW earns when in private practice. So I'd say that $52k is about what I see MSWs make in my state (and if you're wondering, yes, I'd say they are underpaid).

As I have a full-time private practice and coach other therapists to have sustainable private practices, I think the private practice figure of $72,000 is low. My colleagues, clients, and I regularly earn over $100,000 in private practice. If you are gawking at earning $100,000 as a therapist, I'll invite you to remember that therapists are mid-level healthcare providers. Other mid-level practitioners like nurse practitioners and physician's assistants can expect to make $90-120k for their work in Michigan. Psychotherapists should be advocating for similar compensation for our work. 

How Much Does a Life Coach Make?

According to Zip Recruiter, a life coach in Michigan makes on average $50,549. Despite what all of the celebrity coaches will have you believing, coaching is no more of a lucrative field than psychotherapy. Some coaches make a lot, but some don't earn that much. The same goes for therapists: some make sustainable incomes, and others struggle to make ends meet. Having a viable niche, a defined audience and a way for clients to know you exist (aka marketing) are keys to a viable coaching or therapy practice. 

The Takeaway?

Let me put it all together and return to the question that brought about this topic. "Why would you be a therapist when coaches make more money?"

BOTH professions are ones in which you can earn a living. BOTH professions require a level of niching and marketing to be successful. BOTH professions have a reason to exist and work to serve people in the capacity they need to be served in. BOTH professions can operate ethically. 

We should stop gatekeeping between disciplines, allow therapists to have coaching training, and allow non-therapists to access education on mental health.

Therapists are subject to brainwashing that makes them believe that the only way to earn a good living is to burn their therapy license and move into coaching. I don't see it this way. I think it's more than possible, as I and many of my colleagues and clients are examples of financially successful private practice therapists. 

What’s Next for You as a Private Practice Therapist

There you have it! Now you have a better understanding of the differences between therapy and coaching. If you are a private practice therapist and have been wrestling with a few questions in your head about upcoming entrepreneurial decisions, raising your fees, or transitioning to becoming a coach, I’d be happy to chat with you! Book a 75-minute Power Session with me today and we’ll make a plan collaboratively!

 
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93: Therapist or Coach: Who Should I Work With

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91: Money Dates: Tips From a Financial Therapist