Financial coaching draws from solution-focused therapy, an approach grounded in the idea that clients want to change their financial behaviors, are able to direct the changes they most want to achieve, and can actively work to practice and sustain their achievements.(1) Financial coaches view clients as being self-directed, resourceful, and creative problem solvers.(2) The coach is not there to fix problems for the client, but rather to support clients in making their own decisions about their goals and actions.
Financial coaching uses a “strengths-based” approach. This means that coaches focus on improvements, rather than deficiencies or problems. Clients are encouraged to define what they do well and build on those strengths. Ideally, the coaching approach empowers clients to take more control over their personal finances and financial management behaviors. Coaching also can help people feel more confident about their financial lives.(3)
This strategy encourages clients to think critically when considering what is most important to them in their financial lives, and how best to achieve their personal financial goals. Financial coaches generally do not directly intervene or act on a client’s behalf. Instead, coaches hold clients accountable to take on financial planning and other tasks on their own, providing guidance, subject matter expertise and encouragement during the process. Financial coaches encourage clients make their own financial goals, help clients refine strategies to achieve those goals, and follow up to help clients focus on their intended actions.(4)
Common strategies used by financial coaches,(5) which may also be used in other forms of financial education and counseling, include:(6)
- active listening—focusing on what the client is saying and framing the meaning of what is said in the context of financial goals;
- using silence – giving clients time to think before offering a response and being comfortable with silence while clients collect their thoughts;
- reflecting – repeating back key words and phrases to help clients know they are being listened to and to encourage reflection and build trust;
- summarizing– synthesizing common themes or patterns in the client’s goals and plans, focusing on areas for improvement and growth, without being judgmental;
- asking —asking open-ended questions, allowing clients to reflect and explore new insights, while refining or affirming their personal financial goals and intended actions;
- looking forward – focusing on future goals and plans driven by the client, keeping clients from dwelling on the past and instead focusing on their strengths, options and what to do next
- accountability – holding clients to measurable goals with specific deadlines, helping clients practice self-discipline, celebrating successes when they occur.
1 O’Connell, B., & Palmer, S. (2007). Solution-focused coaching. In S. Palmer & A. Whybrow (Eds.), Handbook of coaching psychology (pp. 278-292). New York: Routledge.
2 Browne, C., & Mills, C. (2001). Theoretical Frameworks: Ecological Model, Strengths Perspective, and Empowerment Theory. In R. Fong and S. Furuto (Eds.), Culturally Competent Practice: Skills, Interventions, and Evaluation (pp. 10-32). Boston: Allyn & Bacon.
3 Weick, A, et al. (1989). “A Strengths Perspective for Social Work Practice”. Social Work. 34 (4), pp. 350-354.
4 Collins, J. M., & O’Rourke, C. M. (2012). The Application of Coaching Techniques to Financial Issues. Journal of Financial Therapy, 3 (2) 3. http://dx.doi.org/10.4148/jft.v3i2.1659
6 Whitworth, L. (2007). Co-active coaching: New skills for coaching people toward success in work and life. Davies-Black Publishing.\
Source: 2016, Implementing Financial Coaching: Implications for Practitioners, pp. 6-7