Financial Counseling and Coaching for the Client and the Practice

by Chia-Li Chien, Ph.D., CFP^®, PMP^® Dec 17, 2020

There is a sense of accomplishment in financial planning when clients leave your office with a plan in hand. But we all know that it cannot be assumed that the clients have provided you with the complete picture of their financial behavior to build the plan or that the clients will follow through with action items in the plan. New designations show consumers that an advisor has gone beyond the CFP™ or other financial planning designation to become more proficient in addressing the need for counseling and coaching in the profession, offering additional skills to help clients meet goals. The AFC® (Accredited Financial Counselor) and FFC® (Financial Fitness Coach) are two such designations. To learn more about the designations’ purpose and benefits to the advisor and client, I consulted with nationally recognized financial coaching expert Saundra Davis who was instrumental in the development of these specialties.

Ms. Davis is a financial coach, educator, and consultant nationally recognized for her expertise and for her work with community-based organizations. She developed and facilitates the Financial Fitness Coach (FFC®) certification program to promote the highest standard of professional services for all people, irrespective of wealth, and income. As a Financial Behavior Specialist (FBS®), Ms. Davis’ philosophy of the financial health continuum of care has shaped financial coaching efforts around the country.

I asked Saundra to help me understand the differences between coaching and counseling. She explained that there is a continuum of financial advising—education, coaching, counseling, planning, and therapy. In comparing coaching and counseling, one is not better than the other. As specialties of financial planning, coaching and counseling serve different purposes. Counseling addresses a specific challenge such as credit, debt, or budget. Financial counselors hold the client’s hand to fix an issue. Coaching works to narrow the gap between what people know and what they do; it illuminates—through thoughtful questioning—what gets in the way of meeting life goals. The financial coach sets clients on the path to new behavior, providing them with the information they need, but the clients take full responsibility for the outcome.

Thoughtful questioning is a skill that appears often when discussing advising. I asked Saundra how planners can improve their ability to ask questions. She pointed out that financial planners take pride in what they know and like to supply the correct answers in a situation. However, it is important for advisors not to put their knowledge above the client’s expertise in their own life. Good questions will help the client recognize when their choices are not moving them in the right direction. Good questions also help when there are competing financial priorities. Questions should be posed in a way that enables clients to bring their best thinking to clarify options. For example, a client with limiting beliefs such as a family history of poverty should be asked, “What else is possible?” And there really is only one answer that is always correct in this situation: “It depends.” Adjustments are always made.

I interjected that the financial advisor’s job is to “peel the onion”—to ask additional questions to get the desired information. When comparing health professionals and financial professionals, “physicians are trained to ask questions and rarely tell a direct answer, whereas the CFP™ with the breadth of training always has an answer to tell.” One suggestion would be to pause before answering. In coaching or counseling, the objective is to get the client to follow a “self-discovery path” to uncover the options.

Next, I asked Saundra how much financial planning can influence client behavior. She indicated that clients must want to follow action items and behavior modification to attain a future life vision, and no counselor or coach can make them do that. The best influence an advisor can have is to

• get the clients to connect deeply to the thing they want to accomplish
• help them recognize when they are headed off track
• help them discover things they can do to put themselves back on track
• help them self-correct in the future to be their best

Discovery in financial planning seldom does a deep dive into the vision, where the client can answer, “What will my life look like when it is exactly what I want it to be?”

I pointed out that training in the industry is to get the numbers, then figure out what to do, and then tell the client. Advisors need to have an open mind to dive deeper than the numbers. This helps develop a strong relationship with the client and holds the clients accountable to do the right things for themselves.

I asked her if ultimately the goal of coaching, counseling, and behavioral adjusting is for the client to make decisions by themselves. Saundra said yes, but added that the planner supplies the information the client needs to make decisions, and coaching and counseling support the financial plan. She added that planners get stressed out at the notion of accountability because they service the client. They may be fearful of being fired. The expectation for client accountability should be established at the start of the client-advisor relationship. She suggested an approach such as, “I want to know that you care about what makes your heart beat fast and that you can work with me to determine what steps you are ready, willing, and able to take. And that you and I will be partners in you taking those steps and leaning on me when you need something from me but trusting yourself to do what you know is best for you.”

I believe that the typical industry business model can make it difficult to implement coaching and counseling into the practice. Agents are trained to be independent generalists, but there should also be specialists including coaches and counselors who can leverage partnerships with other specialists. So, I asked, what is the starting point for someone who wants to implement coaching and counseling into their practice?

Saundra suggested doing a self-assessment to find what you are good at. Before you invest in courses, you want to be sure you know your passion. You can hire, partner, or collaborate with other specialists, getting and giving referrals.

Dominique Henderson, CFP™, and founder of DJH Capital Management and the Jumpstart Coaching Lab helps clients with financial services and next-generation financial professionals with their careers. He joined my conversation with Saundra and I asked him how someone already in the finance business could get started introducing counseling and coaching. He advised starting with the why (your passions and strengths), which leads to who (mentor or coach) which leads to how (imitate another professional who shares your passion). He also recommends joining trade and professional organizations to have more exposure and to make contacts with like-minded financial professionals.

Saundra added that certification is crucial to protect against incomplete advice from nonexperts. Certified professionals set and hold high standards so consumers know what to expect in terms of education, experience, and ethics. Getting the FFC® or AFC® designations will highlight your specialty and improve your skills in coaching and counseling. The FFC® coaching certification process assumes prior finance knowledge to understand the content in practice case studies but goes on to pursue how financial information lives in the client’s life. A coach cannot change behavior but helps the client uncover obstacles and opportunities.

With AFC® certification, you understand the full life cycle of finance, debt and budgeting, credit and credit scores, home buying and other common financial issues. The CFP™ alone does not provide that depth, but rather a broader knowledge. The CFP™ treats debt as leverage for wealth building, whereas the AFC® asks, how is debt fitting into your life? Are you using it to live on? And then you get into how to adjust. Without proper training it is hard to ask the right questions. One course in counseling enables a CFP™ to sit for the AFC® exam.

To summarize, counseling and coaching provide definite benefits for some clients and financial advisors can offer those services by personally enhancing their skills and earning AFC® or FFC® designations or by adding trained advisors to practice by hiring or collaborating. Financial advisors should assist in those areas of the financial life cycle that match their passions and abilities.

To explore this and other topics of relevance to your financial planning practice, contact me for an appointment at https://bit.ly/vgi_app.

About the author: Chia-Li Chien, Ph.D., CFP®, PMP, is a Succession Strategist of Value Growth Institute, dedicated to helping private business owners increase the equity value of their firms. She is the award-winning author of the books “Enhancing Retirement Success Rates in the United States: Leveraging Reverse Mortgages, Delaying Social Security, and Exploring Continuous Work,” “Show Me the Money” and “Work Toward Reward.” She can be reached at jolly@chialichien.com.