Using the continuum theory the influence of the external magnetic field on the ferrocholesteric — ferronematic phase transition is analyzed. The field being applied normal to the helix. Soft homeotropic coupling between the magnetic particles and the cholesteric molecules is assumed. The diamagnetic anisotropy of the matrix is chosen to be positive. In this case the dipolar and quadrupolar mechanisms of orientational interaction with the external field compete with each other. The transition field as a function of the material parameters of a ferrocholesteric is found. The reentrant ferrocholesteric and ferronematic phases are discussed. It is shown that rising the field strength in the ferronematic phase leads to the change in the coupling between the particles and the director from homeotropic to planar one. A study on the structure of the domain walls in ferronematic phase is undertaken.