Financial coaching – advice and insights

Financial coaching is a bit mysterious. What is the difference between coaching and counseling? Is financial coaching effective? Is it scalable? Who benefits? So many questions…

I have some answers that will be helpful to the growing number of credit unions beginning to explore financial coaching.

Coaching vs. counseling

What is the difference between coaching and counseling?

Coaching is a multi-session relationship driven by the participant, with the coach typically serving as an accountability partner and cheerleader. A financial coach can help people learn new money management skills, change financial behaviors, and work toward specific financial goals. Counseling is usually a single session driven by a counselor offering advice and recommendations to resolve a financial crisis.

If your credit union is curious about financial coaching, you’ll be interested in learnings from a two-year pilot conducted by GreenPath Financial Wellness in collaboration with the JPMorgan Chase Foundation and the Center for Financial Security (CFS) at the University of Wisconsin. Insights are based on coaching experiences with 309 participants recruited through three organizations: Self-Help Credit Union, ArtBuilt (NY), and United Way of Greater Mercer County (NJ).

Insights & suggestions

Target people who want to change behavior.

Appeal to people who want help bridging the gap between intention and action. People in a financial crisis are not ideal coaching candidates. Change in personal circumstances (job loss, divorce, new baby, etc.) often creates the desire for change.

Define coaching success by individual goals. 

Participants crave accountability, support, and encouragement. They want to reduce their stress levels, stop living paycheck to paycheck, be more confident in money decisions, and feel more in control of their financial future. Maybe they want to buy a house or car. Funders often want financial outcomes such as increased savings, decreased debt, and improved credit scores. Those are desirable goals, but they are byproducts of helping participants accomplish individual goals.

Self-reported data is inconsistent and unreliable. 

Relying on self-reporting makes it difficult to prove impact of coaching on people’s lives. When possible, use data obtained from credit reports or financial institutions.

Use empathy to meet people where they are.  

The importance of empathy was a resounding theme expressed by coaches and participants. Train your coaches in empathy and empathic communication. GreenPath provided its coaches with 16 hours of empathy training and ongoing support from an empathy coach.

Drip email marketing improved participation.

We increased participation by implementing a drip email campaign to remind people of the coaching opportunity. Emails are more effective if sent from an organization recognized and trusted by the recipient. Emails sent by the partner achieved higher engagement rates than emails sent by GreenPath.

Use an online appointment scheduler.

Giving participants the ability to schedule their own appointments removes barriers and improves efficiency. It enables people to take action when it is convenient for them.

Automate as much as possible.

Appointment reminders, sent by text and email, significantly improved appointment show rates. 82% of scheduled appointments showed up. Automated accountability check-ins were also effective. Automate workflows and reminders for the coaching staff too.

Match coaching style to participant preferences.

Some people prefer a coach that is hard on them, while others prefer more of a cheerleader. Early in the process, consider probing about preferred coaching style to match participants with individual coaches.

Celebrate accomplishments.

Set short-term goals, establish milestones, and celebrate achievements. This is important to keep participants engaged and feeling like they’re making progress.  Show up with empathy when goals are not met.

Use education in conjunction with coaching.

Provide education that is relevant to the participant’s financial goals. Make information easy to access and actionable. Use coaching to help them apply the information to their lives, ultimately changing their behavior and shifting their perspective on money.

Provide clear next steps and deadlines.

After each coaching session, lay out clear next steps and specific due dates. Most participants want an accountability partner that will help them build confidence in their financial decisions. Collaborate on outcomes and measurements for success.

Meaningful improvement can occur within six months.

In general, participants felt that 3-6 months was a desirable timeframe for committing to a coaching relationship. That commitment often extends into longer engagements depending on the participant, their situation, and their goals.

For more information

CFS created a white paper, which you can access here.