Definition of financial coach



What is a financial coach?

Financial Coach is a relatively new term for someone offering their services to help others with money related issues. Unlike some other financial professionals, financial coaches are not licensed and can vary widely in their expertise. Financial coaches can also be referred to as financial wellness coaches, money coaches, and the like.

Key points to remember

  • Financial coaches help people with everyday money matters, such as opening a bank account, paying off debt, and saving for the future.
  • Financial coaches are not licensed and everyone can call themselves one, although some may have received professional training and certification.
  • Coaching services are often available through local nonprofit organizations and some employers. You can also hire a financial coach yourself.

Understanding Financial Coaches

While anyone can call themselves a financial coach, the Consumer Financial Protection Bureau (CFPB) in 2017 published a list of skills and knowledge that most experts consider important in financial coaching. The first three were:

  • Coaching and motivation skills.
  • Knowledge of financial content “with breadth and depth… to meet diverse consumer needs”.
  • Cultural responsiveness and systemic understanding.

The CFPB had launched its own financial coaching initiative two years earlier to provide advice to military veterans making the transition to civilian life as well as economically vulnerable consumers. As the CFPB noted, “These populations can be faced with complex financial decisions that have a profound impact on their lives. However, they often do not have access to unbiased financial information or to experienced professional financial mentors ”.

Today, some financial coaches continue to serve these populations while others target wealthier consumers with different needs.

What training do financial coaches have?

There are no specific education or training requirements to become a financial coach. In fact, the CFPB has recognized that “setting a standard that is too high could create a barrier to entry into the field of coaching. Specifically, the expenses that typically accompany certifications could prevent people in underserved communities from serving their neighborhood as a financial coach. “

For future financial coaches who can afford the expense, however, there are certification programs that can provide them with training and referrals.

For example, the Association for Financial Counseling & Planning Education (AFCPE) offers the Accredited Financial Counselor (AFC) certification. According to the association, counselors learn to “educate clients on sound financial principles,” help them overcome debt and “identify and change inefficient money management behaviors,” among other training.

An AFC certification program is designed for individuals who already hold Chartered Financial Planner (CFP), Chartered Accountant (CPA), Chartered Financial Consultant (ChFC), or Chartered Financial Analyst (CFA) designations. ).

The cost of obtaining certification ranges from $ 780 to $ 2,130, depending on the program.

The AFC designation is accredited by the National Commission of Certification Agencies (NCCA).

Financial coaches can also receive training from local nonprofits and then serve as volunteers in their community. The Community Service Society of New York, for example, trains volunteers aged 55 and over to join its Financial Coaching Corps. Members are integrated with community organizations in low income areas that are underserved by conventional banks. Coaches will advise clients, for example, to open a bank account and avoid ancillary banking services such as check cashing stores and payday loans.

What can and can’t financial coaches do?

The role of a financial coach is to inform and motivate. Unless they have additional credentials, they cannot perform the same roles as some other finance professionals. For example, financial planners, if they have the appropriate securities licenses, may recommend and in some cases sell financial products, such as mutual funds or other investments.

It should be noted, however, that not all financial planners are certified or licensed, and just like coaches, anyone can claim the title. Likewise, anyone can call themselves a financial adviser, although in order to legally use the title of investment adviser, it must be registered with the Securities and Exchange Commission or a securities regulator in the. State.

How to find a financial coach

There is no central resource for finding a financial coach, so you will need to educate yourself. If you have a lawyer or accountant, they may be able to refer you to a lawyer in your area.

A local community group, especially one that serves low-income consumers, can provide coaching services. Online and in-person coaching, especially for debt-related issues, is also available through the National Foundation for Credit Counseling; the organization says the fees vary depending on the member agency.

Your employer, if you have one, may also offer free financial coaching as part of their employee assistance program.

You can find a coach with Accredited Financial Counselor certification on the Association for Financial Counseling & Planning Education website. As of this writing, the organization is making free virtual coaching sessions available to “individuals and families who are grappling with the financial implications of COVID-19.”

What do financial coaches charge?

Financial coaching is offered free of charge by some organizations that work with low-income families.

Otherwise, the cost of coaching varies widely, depending on the location, background and credentials of the coach, and other factors. A National Financial Educators Council review found that coaches who billed by the hour were paid $ 75 to $ 600 per hour, with $ 257 being the national average.

What is the difference between a financial coach and a financial planner?

Financial coaches provide basic advice on everyday money matters such as paying bills, canceling credit card debt, saving and investing for retirement. Financial planners provide more comprehensive advice and, if authorized to do so, may also recommend and sell investment products.

How are financial coaches paid?

Some financial coaches are volunteers, such as retirees with other sources of income. Some may work for organizations that pay them to provide coaching services. If you are considering hiring a financial coach to work with you, you will likely pay them either at an hourly rate or at a flat rate for a bundle of services.

How do I know if I’m getting good advice from my financial coach?

If you are in doubt about the advice a financial coach gives you, you can easily get a second opinion by reading the topic on a reliable website such as Investopedia or from the US Financial Literacy and Education Commission.

The bottom line

Financial coaches help advise people on everyday money matters. Because they are not licensed, they are limited in the services they can provide. Their expertise can also vary widely, although there are certification programs that indicate that a trainer has received certain training and passed a required test.



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