Financial Coaching: An Overview

J. Michael Collins Prepared for presentation at the

Centers for Working Families, July 22-23, 2010

Typical Features of Coaching

• As used across fields

• One-one relationship over time

• Focus on self-actualization – Practice skills and strategies with support

• Generally goal-focused

• Typical client has potential to improve performance– Non-clinical; strengths based; non-crisis

Financial Coaching

• Relationship-based • Client Directed’

• Self-activated goals• Goal Focused

– Performance improvement• Not an ‘expert’

– Goal setting • Monitoring & Accountability

Financial Capacity Building

InformationModels

Advice Models

MechanismModels

• Disclosures• Print/Web• Interactive Web• Workshops• One:One• Reminders

• Technical expert (credentialed)

• Transactional guide (may have sales focus)

• Counseling (acute problem solving)

• Coaching

• Defaults• Automatic Deposit• Product constraints

Therapy – diagnosis / Treatment • Self Control: External Monitoring

• Executive Attention

Working Definition of Coaching

Key Elements of Coaching

• a focus on long-term outcomes (future orientation)

• an ongoing, systematic, collaborative process for assisting clients to change behaviors

• support to practice new behaviors

• building skills and teaching content based on the client’s unique needs and goals

Steps: 1. Goal setting

2. Action planning

3. Monitoring

“a collaborative solution-focused, result-oriented and systematic process in which the coach facilitates the enhancement of life experience and goal attainment of normal, non-clinical clients” (Grant, 2003).

Coaching Low-income Clients• Not financial or estate planning

• Fewer financial assets; less likely to have employer benefits

• May be eligible for public benefits or special private programs

• Credit management critical

• Lack of experience with financial institutions, products

• Pressure on time and limited resources

Appreciate and excel with financial coaching approach

Coaching Models

Staffing:• Pro bono

expert• Paid staff• Financial

professional volunteer

• Lay volunteer

Setting:• Clients in

Tax/IDA/other program

• School/work- place based

• Head Start• Other

Facilitation SkillsICF Core Coaching Competencies

1. Setting the foundation

• Ethical and professional standards

• Establishing the coaching agreement

2. Co-creating the relationship

• Establishing trust and intimacy with the client

• Coaching presence

3. Communicating effectively

• Active listening• Powerful questioning• Direct communication

4. Facilitating learning and results

• Creating awareness• Designing actions• Planning and goal setting• Managing progress and

accountability

Outcomes

• Goals – attainable, measurable– Formation of well articulated goal

• Confidence– In money management

• Financial Literacy– Gain knowledge about credit, budgeting and products

• Self-Control– Regular savings or debt repayment behavior

• Building Block for Future– Seeking additional products / services

Satisfaction: Most Coached Clients Are Happy with

Services

How satisfied are you with how well you and your coach work together to solve your problems?

Source: CNM Coaching Survey

More likely to have Goals and Greater Confidence will Reach

Goals

Source: MoneyUP Client Survey

Greater Financial Security?Financial Management and Access to Benefits

Source: Abt Associates CWF Survey

More Likely to SaveThinking about the last year, which statement best

describes your typical savings behavior?

Source: Abt Associates CWF Survey

Measuring Impacts?

• Self report + administrative data (FICO, account balances, etc)

• Valid comparison group• Ideal: Randomize offer

• But coaching has intrinsic bias of most motivated clients – hard to separate service from choice to participate• Focus more on mechanism: self control and

executive attention

J. Michael CollinsFaculty Director, Center for Financial SecurityUniversity of Wisconsin-Madison7401 Social Science, 1180 Observatory DriveMadison, WI 53706608-616-0369jmcollins@wisc.edu

For More Information: http://www.uwfamilyfinancialsecurity.org/