There are different definitions of what financial coaching is. Some people think it’s just about working with the emotional relationship to money – the habits, behaviours and childhood associations with money that a client might have – and while it is, there’s a lot more to it than that.
Financial coaching also allows you to do very practical work with clients – you can pull together a detailed spreadsheet or even use cashflow modelling with them and ask questions around decision making that can have practical implications. For example: “Can I afford to privately educate my children?” “Should I allow my daughter to take a student loan, or can I fund it for her?” Or “I’ve been offered voluntary redundancy – should I take it?”
It’s helping clients think through the emotional implications of those decisions as well as the practical.
There’s also a lot you can do with a blend of coaching and mentoring skills – for example with someone who comes to you and says: “I need help to manage my finances, get control over my impulsive spending, pay off my debt and save more money. I am well paid and feel more or less in control of other areas of my life but lack confidence and control when it comes to money.”
Three stages
When I talk about financial coaching, I draw up a Venn diagram with three circles. While we always apply a coaching mindset to everything we do, there are different roles we can play:
One is generic advice, where you might talk about the importance of building up an emergency pot or having a Will and the implications of dying intestate. This isn’t regulated advice, but generic advice.
Then you’ve got the ‘mentor’ role, where you can introduce tools and processes to help clients manage their money and share financial knowledge. For example, explaining how Lifetime ISAs work, or showing them a tool that would help them work out how to become debt-free. You’re enhancing their confidence and understanding here, while including your expertise.
Then you’ve got the pure coach role where the client is the expert, not you. They are the expert of their own lives. That’s where you’re helping them really clarify what they want, gain insight and deep awareness of their blocks, and help them create change in their lives and see things from a different perspective. This part of the work can create huge transformation for a client.
For example, I worked with a client where we successfully shifted her relationship with debt. She then started her own business and was doing really well financially and building assets, but she began to worry that every time she took a day off, she’d lose money. She was looking at everything through the lens of “Will there be enough?” Through coaching, she’s shifted her internal narrative to “Anything I need is within my grasp”.
Someone with that sense of “there’s never enough” can really benefit from coaching in order to unpack that. Coaching skills can help them to adopt a different mindset and work through new behaviours.
Charging structure
There are plenty of clients who’ve built up a pension through work, their own ISA through a DIY platform, and just want guidance to help them align their finances with what’s truly important to them. For them, they’re not seeking advice and are just looking for one-off support, which means as a coach, we can just charge by the hour, and we’re not restricted by minimum asset levels.
There are several different models to choose from: you can simply charge as you go for each session, create a programme that people enrol in for, say, six months or for six sessions. Or there are group coaching options or membership clubs where clients pay an ongoing subscription.
This is very different to having an assets under management approach where you’re servicing a certain number of clients and there’s not necessarily a need to go looking for new business all the time.
With financial coaching, you might have some clients with you for life, but with most you’ll be providing a short-term service to empower and support them through changes or decisions they’re making. They might only need six sessions for example, and for this you need a consistently larger client base.
Proposition
So how does it work in practice? Well, some financial advisers decide to set up two businesses – a regulated practice and non-regulated practice.
Then you’ve got people who are integrating coaching skills into their proposition. Some people introduce coaching at the beginning of the process to help them with goal setting – this way we can really help people tap into what’s most profoundly important to them in their lives and tease this out of them.
But some clients need coaching all the way through an advisory process. You might be dealing with an issue related to being over generous with their child, high jacking their own financial plans, or they’ve hit an obstacle: they’ve said they want to work four days a week for example, you’ve mapped it out on the plan, but they don’t do it because they’re scared of running out of money. That’s where coaching skills come in.
The thing I find most profound is holding a safe space to allow clients to talk about money, where it’s not linked to the sale of financial products. By working on a fee structure with them, without offering regulated advice, there’s no question in their mind about shoehorning them into anything and they experience a huge sense of trust. And just holding an empathic space to talk about money can be really therapeutic.
As coaches we have time to focus on whatever they bring to the session. In the advisory world people are sometimes doing a bit of coaching shoehorned into a process that involves meeting with needs of the regulator. But with a coaching hat on, you’re saying ‘You’ve got my undivided attention to focus on whatever you want to bring to the table. I haven’t got an agenda - you have.’ You would expect the client to speak, say, 80% of the time and the coach 20%. There’s space and time allow them to express what’s going on for them at a deeper level, listen profoundly, ask insightful questions and partner with them for change.
This is what clients love – in my experience they don’t admire the financial qualifications as much as your ability to listen well, to ask thought-provoking questions, to help them think outside the box, and to help them to identify what’s truly important to them.
Coaching allows you to build a strong, trusted, empathetic relationship with a client, and help create transformation. It’s beautiful, soul-nourishing work.