Types of Coaching

By: Chris Budd
Chairman
Ovation Finance & The Eternal Business Consultancy

In financial advice, two types of coaching have been rising in prominence over recent years: ‘pure’ coaching, and financial coaching. Although they share a name, there are differences. Chris Budd explains.

In 2013 I achieved my diploma in business coaching. Since then I have been writing and speaking about the importance for advisers in using coaching skills. In particular, I advocate coaching first, then planning, then advice.

Along with Jan Bowen Nielsen of Quiver Management, we have been running training courses for advisers to learn coaching skills.

At the same time, Simonne Gnessen and Catherine Morgan, in particular, have been developing and advocating the discipline of financial coaching. They have also been training advisers and non-regulated individuals.

So, what are the differences between coaching and financial coaching?

Coaching Skills

There are certain basic skills common to all types of coaching. In my business coaching training, I needed to learn thorough listening and questioning techniques.

In my experience, many advisers believe that they already possess these skills. What I learnt in the two years it took me to achieve my diploma was that it is extremely difficult to truly remove yourself from a conversation and make the discussion entirely about the client.

Financial advisers are trained to deliver solutions. In its pure form, coaching is a collaborative approach where the coach helps the client to uncover their own options, beliefs, values, opinions, drivers, blocks, and does not offer a direct solution.

This fundamental difference means leaving technical knowledge and your own values and opinions out of the room and making the focus entirely on the client. This is extremely difficult as it goes against our training, as well as societal norms.

If advisors are to focus their advice on their clients’ financial wellbeing, they need to proactively seek ways to help the client understand what will make them happy. Uncovering clients’ purpose and motivations requires coaching, and provides the context for the planning, which provides the pathway for the advice to achieve.

Our relationship to money

Financial coaching is all about helping clients understand their own relationship to money and then offering them practical steps of help.

In the West, many have a very unhealthy relationship to money, driven in no small part by: advertising; marketing; beliefs that we have held onto and inherited from childhood; and our consumerist culture.

We hold various self-limiting beliefs, views about ourselves that prevent us from making wise decisions with money. These beliefs have built up since childhood, (often going back through the generations) and are often difficult to spot in ourselves.

Behavioural finance has also been rising in popularity through the work of people like Greg Davies, Neil Bage and Andy Hart. Understanding how behavioural biases lead us to poor money decisions can only help improve the quality of financial advice.

Coaching and Financial Coaching

From this we can see that for advisers coaching: the use of questioning and listening skills to help and cover purpose; and financial coaching: understanding our relationship to money are different disciplines.

That said, there is a large overlap in skills between the two. A financial coach will certainly use questioning and listening skills, for example. They will also bring their experience and knowledge to help the person uncover and address their emotional relationship with money.

A ‘pure’ coach (by which I mean one who specifically does not bring any of their own views and values into the discussion) will help a person to work through whatever problems and issues they bring to the session.

The training involved is certainly very different. The coaching training I am involved in teaches advisers how to remove themselves from a conversation and use simple questions to help clients understand themselves better.

Financial coaching uses financial therapy-based concepts, scenarios and tools such as cards to help clients understand their relationship to money.

There is a huge overlap, however, in learning how to listen and how to ask simple but powerful questions.

Conclusion

If advisers are going to practice financial wellbeing, to help clients to be happier (after all, what is the point of financial advice if it is not to make people happier), then developing skills such as coaching and financial coaching are, I believe, essential.

Understanding the difference between the two, and how they complement each other, is a key part of providing what clients need.


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