The Growing Field of Financial Coaching

January 30, 2017
By Jeremy Hegle , Senior Community Development Advisor


When it comes to assisting people with credit, savings or budgeting matters, the terms financial counseling, financial education and financial planning often are used interchangeably. A related, newer approach is financial coaching. Because it sounds similar to other terms, a clearer understanding of financial coaching is needed.

The Financial Coaching Approach
Central New Mexico Community College (CNMCC) is one organization which has been actively involved in the development of the financial coaching field. Ruth Sandoval, program manager of CNMCC’s financial coach training program says that the core of financial coaching is the belief that “clients are naturally creative, resourceful and whole.” A financial coach doesn’t attempt to identify and solve the financial issues for the client. Instead, a financial coach offers a framework to assist the client in determining what’s most important and helps them identify their short, mid, and long-term goals. The coach offers resources, encouragement, monitoring and accountability. That clients are “naturally creative, resourceful and whole” is a mantra widely used within the field.

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(Source: Central New Mexico Ingenuity, Inc.)

Differentiating Financial Coaching from Other Approaches

Financial coaching is sometimes confused with financial counseling, a more traditional approach in which the counselor leads the process of identifying problems and providing solutions. Financial counseling is more effective than financial coaching during times of crisis. For example, a client facing immediate foreclosure or bankruptcy is in greater need of resources than they are in setting long-term financial goals. A common saying is “You can’t coach a client out of crisis.” Financial coaching, on the other hand, can be more beneficial when a client is out of crisis and seeking to improve his or her overall financial well-being.

Subtle distinctions between coaching and counseling are illustrated in the chart to the left from CNMCC. The chart also conveys which approach is best suited for certain situations.

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(Source: Center for Financial Security at the University of Wisconsin-Madison.)

The chart to the right compares and contrasts several common approaches used in meeting a client’s financial knowledge needs. Each approach may be of benefit at different times in a person’s financial life.

Promising Results
Despite a lack of standardization in measuring outcomes, financial coaching programs have shown success. Some, such as the Local Initiatives Support Corporation’s Financial Opportunity Centers (LISC’s FOCs) blend financial coaching with other services, such as job training, access to social services and low-cost financial products. In 2014, the Corporation for Enterprise Development noted the following outcomes from LISC Chicago’s FOC program:

  • 72 percent of clients increased net income
  • 48 percent of clients increased net worth
  • 44 percent of clients improved their credit score (a median increase of 39 points)

Assessing the Field
Organizations nationwide are working to make the field more professional by identifying best practices and metrics for success. In 2015, the Center for Financial Security at the University of Wisconsin-Madison, in cooperation with UW Extension, and the Asset Funders Network launched a Financial Coaching Census. The census identified 358 organizations in 47 states that either deliver or fund financial coaching programs. Complete results are available here. The 2016 Census is currently being finalized.

Advancing the Field
Several organizations offer financial coach training, including CNMCC, NeighborWorks America and the University of Wisconsin. The Federal Reserve Bank of Kansas City recently partnered with the Greater Kansas City LISC and the United Way of Greater Kansas City to train Kansas City area community organizations, using CNMCC’s training program. During the five day training, the 33 participants practiced coaching each other and refined their active listening skills. Feedback was positive, as participant Erin Cole of the Women’s Employment Network explained, “the training provided an excellent set of tools for working with clients. It also provided a powerful reminder to focus on the individual’s personal strengths and recognize that each individual is resourceful, creative and whole. The training provided the opportunity to really shift the narrative.