Financial Coaching: A New Approach for Asset Building

At NCCDC, financial coaching has been adopted in the asset-building field for use with low-income clients in the community. Coaching has appeal because it is centered on changing financial behaviors over time based on an ongoing relationship between the coach and the client. The coach has expertise in process and content, but changes in behavior are left for the client to practice and incorporate into his or her daily financial life.

Coaching is differentiated from counseling in that it focuses on changing financial behaviors, rather than focusing on a specific event or problem. Counseling tends to be more therapeutic in nature, while coaching endeavors to help a client improve his or her behavior in order to achieve self-defined goals. Of course, counseling and mentoring all can involve coaching to some degree.

While far from definitive, key elements of financial coaching at NCCDC include:

(1) a focus on long-term outcomes
(2) an ongoing, systematic, collaborative process for assisting clients to change behaviors
(3) support to practice new behaviors
(4) building skills and teaching content based on the client’s unique needs and goals

Delivering Financial Coaching

There are at least three models for providing coaching services to lower-income clients at NCCDC: volunteer coaches, paid financial planners and trained in-house staff. There is also a fourth category of programs that blends planners, volunteers and in-house staff.

Coaching models vary significantly from program to program, depending on the needs of clients and resources available in the community. Each has advantages and disadvantages depending on the context and type of clients served. Blended models are often the most cost-effective. Volunteer models offer low-cost delivery, but do require training and support. Volunteer models generally cannot provide coaching to individual clients for more than a year.

Financial coaching for low-income households typically requires coaches with an understanding of the needs of this population, as well as of the types of social services and other programs that are available. It is important that clients be in a stable position before beginning coaching.

Clients with significant emotional needs and/or major financial problems may not be ideal for a coaching relationship. Clients with such needs may require counseling in tandem with coaching services. All clients of coaching will take some time to develop trust and open communication.