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05

Compounding our money beliefs are our
decision-making flaws

Skills and training required

When you break down financial coaching to its essence, it becomes obvious that advisers are already well placed, by way of skills and experience, to coach their clients:

Essence of financial coaching

01

Educate clients in sound financial principles

02

Assist clients in the process of overcoming financial indebtedness

03

Hep clients identify and modify ineffective money management behaviours

04

Guide clients in developing strategies for achieving financial goals

05

Support clients as they work through their financial challenges and opportunities

06

Help clients develop new perspectives on the dynamics of money in relation to family, friends, and self-esteem.

For Australian financial advisers there are no additional qualifications or accreditations required to be a financial coach. Satisfying the training, licensing and education requirements to act as a registered financial adviser is sufficient.

Nor does coaching require any formal training in mental health, or psychology.

Advisers are already qualified to provide guidance on financial matters. Learning to identify and adjust the approach for individual client money attitudes, behaviours, and cognitive biases requires more of the soft skills we often talk about – communication, empathetic listening, message emotional intelligence. Successful advisers typically have these skills in abundance.

Being remunerated as a coach - the question of fees

One of the more exciting aspects of incorporating a coaching service within your advice offering is it creates the opportunity to generate fee-based revenue from a broader range of clients – clients who may not yet have the assets or complex situation to be viable under a traditional advice approach.

A client who is savings hundreds of dollars per month because of your coaching will be willing, and able, to pay a fee for that help.

There are a variety of approaches advisers could take to setting coaching fees. Importantly, if it is to be offered as a standalone service, it needs to be priced accordingly (not as a loss leader or bundled in with product or asset-based remuneration).

One approach is based on a fixed period of engagement—e.g., $2,500 for a six-month program. Another is a monthly retainer option, or per hour/single session options. Charging on the basis of savings achieved is another option, the value of which is clear to the client.

Group coaching can also be a very effective and efficient way to deliver coaching to fee paying clients.

If coaching takes the form of specific assistance around budgeting and cash flow, there are a number of options here too. Firms already in this space are experimenting with different pricing models, designed to balance affordability and value with sustainability.

MODELS BEING EXPLORED ACROSS THE MARKET INCLUDE:

01

Offering short, digital courses on the fundamentals of cash flow and budgeting for a small fee (e.g., the ‘She’s on the Money’ Budgeting and Cash Flow Masterclass)

02

Tiered models with differentiated fees and services

03

Month to month subscription services with flexible packagess

04

Upfront set-up fee plus small monthly or annual fee alongside existing advice feess

The advantages of a coaching based approach

Whether a coaching offering includes specific help around cash flow and budgeting, or is more geared around improving money attitudes generally, there are many advantages to firms who embed such an approach in their offering:

01

It opens up a broader target market, not traditionally seen as viable for advice

  • Younger clients
  • Clients with few assets
  • Clients who want to take a DIY approach to investing but need some guidance

02

It creates a bigger advice pipeline

03

It helps demystify financial advice and makes it more approachable and accessible

04

It makes the value of advice more obvious

05

It is a high value add service that differentiates the firm from others

06

It allows firms to charge stand-alone advice fees more confidently, to clients who are more willing to pay them

07

By improving the money behaviours of clients, advice outcomes can be optimised

08

An advice offering which resonates emotionally – not just functionally – with clients, creates deeper engagement, greater customer satisfaction and increased client loyalty

An advice offering which resonates emotionally – not just functionally – with clients, creates deeper engagement, greater customer satisfaction and increased client loyalty

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