Financial Coaching A New Profession?
An individual’s life issues and goals are manifold and seeking the right professional to help resolve issues and achieve one’s goals is like finding the proverbial needle in the haystack.
Coaching as a profession is not new as one can find individuals providing their respective genre of coaching in all walks of life. However, in this article the emphasis will be on life coaching and the niche of financial coaching.
It is generally accepted by the coaching fraternity that coaching can be defined as having conversations with clients as partners in a process that builds awareness to maximise their potential and performance. The process helps to empower them to take ownership and commit to the necessary actions to work on their issues and challenges, or to achieve their life goals.
It is necessary to note that life coaches generally do not give advice but explore with clients to find the holistic answers which are relevant and effective for each individual client. This differs from the services of consultants, mentors, counsellors and the like where an element of advice is often present and usually expected.
However, life issues or goals are often financially related and not many life coaches are knowledgeable or experienced to understand and deal with financial issues or challenges to the extent that is required to effectively help clients. Hence the services of Licensed Financial Planners and Financial Adviser Representatives (FAR) are often sought as hitherto there are no Certified Financial Coaches in Malaysia.
Financial planning and advisory services are activities regulated in Malaysia by the Securities Commission and Bank Negara and the Malaysian Financial Planning Council (MFPC) defines financial planning as “a process or methodology of assisting clients in determining their financial goals, objectives, and priorities and the resources to meet them in an optimal and practical manner”. Hence, a financial planner would generally develop a financial plan with the necessary strategies and products to meet an individual’s financial goals.
A Certified Financial Coach (CFC) is a professional with a combination of the skills and knowledge of both a life coach and a financial planner/advisor and who has successfully completed a recognised programme of studies and practicum. This means that a CFC will work with individuals to understand their life goals and financial issues, if any, and then work with the individuals to create together a plan, to achieve their goals and resolve their financial issues, which the individuals will take ownership and commit to. The primary objective of the CFC will be to help individuals understand their financial challenges or goals and help them on a personal level to understand the basics of personal financial management. This awareness will then empower the individuals to focus on financial management and behavioural change and take ownership to be accountable for their actions to resolve financial issues and achieve their life goals.
It is important to note that often there is a thin red line between the generally accepted practice by coaches not to give advice and the tendency to give advice in the form of suggestions or through the sharing of the coach’s life experiences. Thus, unless the financial coach is also a Licensed Financial Planner/FAR and can differentiate between the coaching and financial advisory services, it is always of paramount importance to remember that provision of financial planning and advisory services are regulated and licensed activities in Malaysia.
In conclusion, whilst there is always the need for the services of a general practitioner, it is often necessary that one may need to seek out a specialist and hence life coaches should choose a niche to specialise in the crowded coaching field. As financial coaching can be considered a new niche in coaching, life coaches with or without a financial planning, accounting or finance background would do well to seek to become a Certified Financial Coach.