What is financial coaching? Is it the same as financial counseling or financial planning? Are those different from financial education?
It’s a pretty basic question of financial terminology, but an important one. After all, these terms – financial coaching, counseling, education and planning – are often used interchangeably. A recent paper on the topic by Dr. J. Michael Collins at The Center for Financial Security helps to set the terms straight.
The field identification guide helps clarify what service an organization or professional is delivering. It also helps potential clients understand what service to seek out. Someone who needs financial coaching but calls a financial planner won’t get the right help – and may only be frustrated by the interaction.
Of course, much of the fault lies in the interchangeability of terms used by organizations and professionals. Also, the paper does not tackle the various certifications, standards, licenses and accrediting organizations that define each role and title. Although the CFP designation is well known and understood, other titles like “financial coach” are used more generically and certification, training and experience can vary widely.
Additionally, Money Habitudes is often used to train all of the above professions. It’s typically used to help people understand how different clients see and use money and to help people talk about habits and attitudes as opposed to just talking about skills and facts. It’s also used as a sensitivity training tool: to help people who are, for example, very comfortable with financial plans and numbers and spreadsheets to work with people who are not like them, but who have other strengths.