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What is a Financial Coach?[emailprotected]2024-03-26T21:27:26+00:00
What is a Financial Coach & What do Financial Coaches do?
The term “financial coach” refers to a professional who works to understand a client’s current situation by conducting empirical analysis of the client’s finances; uncovers their goals and needs; defines clear objectives for the client; prioritizes steps; provides education, guidance, and accountability; and supports clients to work toward a state of financial wellness and security.
Thus a financial coach’s role is to offer education, tools, resources, encouragement, and monitoring – not financial advice. Rather than telling clients what to do with their money, financial coaches give clients information, support, and tools so they can make their own qualified money management decisions.
So what is a financial coach? Continue reading to understand the coach’s role, process of coaching, and standards coaches must meet.
What Financial Coaches do to Serve Clients
A coach’s main role is to empower clients with the knowledge, skills, and confidence they need to make qualified financial decisions. Their objectives are outcome-based; that means the primary goal is to improve the client’s financial situation.
What Financial Coaches do Not do
To get a clear definition of what a financial coach is, it’s equally important to understand what financial coaches are not. Financial coaching is not meant to be a therapeutic relationship or crisis management service. Coaches provide encouragement and monitoring, rather than advice. The behavior change process should be client-driven and designed to help clients work toward reaching their stated goals.
It also should be noted that a personal financial coach is not an investment advisor. The Securities and Exchange Commission offers a clear and binding definition of investment advisors: persons or firms that are “engaged in the business of; providing advice to others or issuing reports or analyses regarding securities.” So financial coaches do not recommend stocks or other investments.
Process Financial Coaches Use to Support Clients
Understanding Clients’ Current Financial Situations. Financial coaching starts with gaining a deep understanding of each client’s current situation.
Understanding Clients’ Goals & Future Needs. Each client has different needs the coach must keep in mind when helping them plan.
Diagnosing Areas to Best Help Clients Meet Their Goals. Identifying the root causes of clients’ current situations is a skill set coaches must possess.
Establishing Goals & Outcomes. When working with clients, coaches help them establish short-, mid-, and long-term goals with reasonable timelines.
Prioritizing Steps to Maximize Efficiency. Planning in a structured manner can reduce the time it takes for clients to reach their goals.
Providing Education & Guidance to Support Client Action. Armed with a clear plan and prioritized steps, a coach’s role shifts to education and guidance.
Offering Support & Accountability. Along with education, coaches provide support and accountability to help clients complete the steps to reach their goals.
Review & Report Progress. For a professional coach, it’s important to measure, track clients’ progress, and celebrate their accomplishments.
What is a Financial Coach’s Set of Qualifications?
Anyone can set up shop as a financial coach. But NFEC Certified Personal Financial Wellness Consultants must comply with the highest level of experiential, educational, and background criteria. So what does a financial coach do to meet these criteria? NFEC coaches have completed their financial coaching certification and must comply with strict obligations including hundreds of hours of education, demanding tests, and supervised implementation and performance evaluations. The NFEC created its standards with direction from four industries: 1) counseling psychology, 2) coaching, 3) consumer and financial protection, and 4) education, specifically financial education. These industries help inform standards for coaches, who must deal with the emotional subject of personal finance; and give clients education, accountability, and guidance toward financial wellness.
Learn More About NFEC Certified Coaching Options
Guest Article - Certified Financial Coaching Program Defines What is Financial Coaching
Our country has never needed financial education more than it does today. As the fiscal landscape grows ever more complex, our citizens’ knowledge level needs to keep pace. That’s why the National Financial Educators Council developed its Certified Financial Education Consultant program. This program was designed to address the increasing number of financial coach jobs now available across the U.S. “What is financial coaching?” many may ask. Financial coaching refers to providing the expert advice and financial education individuals need to feel confident in their financial planning process.
The NFEC’s CFEC program goes far beyond the average financial coaching programs currently available out there. CFEC graduates have undergone more than 120 hours of rigorous training, preparing them to understand people’s current financial situations and help them develop comprehensive plans for the future. These trained coaching professionals understand people’s emotional ties with making financial decisions. They help clients get beyond the emotions to make the decisions that are best aligned with their personal objectives. They provide the financial education and guidance people need to feel confident to make key decisions at important financial life junctures.
Furthermore, a financial life coach is well-situated to offer unbiased advice. While some money advisors may be primarily seeking to sell you something, CFECs do not get paid from selling investment products. Because they are not bound by heavy regulations, financial coaches have the freedom to recommend choices and decisions they truly believe will help you accomplish your goals. So if you have recently been considering the question, “What is financial coaching?” investigating what the NFEC has to offer may be a life-changing option for you.
What is a Financial Coach?
Given the complexity of today’s financial marketplace, people often ask, “What is a financial coach?” The NFEC has the answer – a national network of consultants who feel a passion for helping others improve their finances and work toward their personal finance and lifestyle goals. Every NFEC financial coach has reached the top tier of qualifications for the industry and has a primary objective of championing you toward financial health by giving you educational and accountability support. So what is financial coaching? Read the NFEC’s complete definition of a financial coach.
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What is a Financial Coach’s Set of Qualifications?
Anyone can set up shop as a financial coach. But NFEC Certified Personal Financial Wellness Consultants must comply with the highest level of experiential, educational, and background criteria. So what does a financial coach do to meet these criteria? NFEC coaches have completed their financial coaching certification and must comply with strict obligations including hundreds of hours of education, demanding tests, and supervised implementation and performance evaluations. The NFEC created its standards with direction from four industries: 1) counseling psychology, 2) coaching, 3) consumer and financial protection, and 4) education, specifically financial education. These industries help inform standards for coaches, who must deal with the emotional subject of personal finance; and give clients education, accountability, and guidance toward financial wellness.
What is a Financial Coach’s Job, on Average?
On average, what is financial coaching? For most coaches, it just means talking with you. NFEC coaches are different – they offer a broad scope of services, all designed with the goal of improving your financial situation in mind. How do we know? We searched Google using keywords ‘financial coaching’, ‘personal financial coaching programs’ and ‘financial counseling,’ and 137 websites turned up in the top 50 pages of results. Out of those 137, 26 had price/package information clearly stated. Upon analyzing these 26 sites we learned that coach contact (by phone or occasionally email) was the top service. A modicum of sites provided educational resources; a few offered written personal financial plans; and only a couple had re-reporting or re-planning services.
Phase 1: Understanding & Planning
When Tom and his wife recently found themselves wondering how to plan for retirement, a friend suggested that they seek financial coaching. “What is financial coaching?” Tom wondered. He did some research and found an NFEC-certified coach nearby. The coach started by reviewing all of Tom’s financial records. She looked at Tom’s income, his wife’s income, their bank accounts, credit, assets and liabilities, and insurance policies – creating a full financial profile for their household. Then the coach gave Tom and his wife a customized Personal Finance Plan Report with priority steps and goals identified.
Phase 2: Guidance & Education
At the next stage, the coach worked with Tom and his wife through consulting meetings and education sessions. On a pre-established schedule, the financial coaching services provided to Tom and his wife provided education, planning, resources, and training so the couple could build their skills to make informed money management decisions. The coach provided Tom and his wife with ongoing written progress reports and gathered updated information to provide evidence for data-driven changes in their financial planning.
Phase 3: Maintenance & Support
Once the couple had addressed their initial pressing needs, particularly regarding their retirement plan, Tom and his wife could let the coach take a back seat while they moved forward toward their goals. During this maintenance and support phase, the coach just remained available for special consultation and to supply resources as needed. Now when someone asked, “What is a financial coach?” or “What does a financial coach do?” Tom had a ready answer.
Specialized Expertise Available for Your Needs
Next-level experts are available through the NFEC’s network when people need specialized guidance. For instance, when a client is considering buying property or another large purchase, a niche real estate expert may be consulted. In Toms case, he was assigned to talk with a retirement speaker and expert coach certified through the NFEC. NFEC coaches have access to such expertise, along with experts from other areas as indicated for the client’s individual situation. And every expert on this team is 100% independent – they are not salespeople or marketers.
