Research Paper: Rajanikanth Chandrasekar Coaching and Financial Planning

7/29/2019 Research Paper: Rajanikanth Chandrasekar Coaching and Financial Planning

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Thought Leadership Article

Name: Rajanikanth Chandrasekar

Date: 03rd Novemebr 2012

Student ID: (Bangalore F2F Program Batch 1)

Email: [email protected]

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Copyright 2006 International Coach Academy Pty. Ltd.Use isgoverned by the Terms and Conditions at http://www.icoachacademy.com

Last updated Nov 2012

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Coaching and Financial Planning

Introduction

Financial Planning

A financial planner is a qualified professional who analyzes a clients financial

situation and develops a comprehensive financial plan based on the clients

goals. The main purpose of a financial planner is to assist clients in the planning

and arrangement of their financial affairs, such as savings, retirement provisions,

tax treatment and wills, and protecting what is most important. To ensure ethical

practices, financial advisors must understand a client's financial situation as wellas their need for financial stability. Finance can be complicated and any adviser

has responsibilities ethically to see that a client's risk is minimized, and

monetarily, that money is maximized within the established risk boundaries.

The Certified Financial Planner Board of Standard (CFP Board) and Financial

Planning standards Board (FPSB), the owners of CFP trademark for US and

Outside US respectively, offer CFP designation, a professional certification mark

for Financial Planners. The designation means that they have met specific

education and testing requirements, agree to standards of ethical conduct, and

engage in continuing education. These planners are often referred to by the

CFP_ designation. Meeting the CFP standard requires a significant investment of

time (and testing fees). But the CFP designation is widely accepted and clients

should expect quality services from a Certified Financial Planner.

Coaching

The International Coach Federation defines coaching in the following way:

Professional coaches provide an ongoing partnership designed to help clients

produce fulfilling results in their personal and professional lives. Coaches help


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people improve their performances and enhance the quality of their lives.

Coaches are trained to listen, to observe and to customize their approach to

individual client needs. They seek to elicit solutions and strategies from the client;

they believe the client is naturally creative and resourceful. The coach's job is to

provide support to enhance the skills, resources, and creativity that the client

already has. (ICF website)

Formed in 1995, today the ICF is the leading global organization, with over

19,000 members, dedicated to advancing the coaching profession by setting high

professional standards, providing independent certification, and building a

network of credentialed coaches.


From the above definitions it is fairly clear that there are some clearly overlapping

positions between Financial Planning and Coaching like significance of the client

relationship, establishing trust, assisting the client in achieving his goals etc.

Of course both the approaches have unique methods wherein financial planner

would primarily use his knowledge on financial products to define a plan for the

Client while coaching enables and empowers the Client to be able to develop his

own plan.

This article explores how the technical skills of financial planning when combined

with facilitation skills of coaching can elevate the Client engagement to a higher

level, leading to enhanced and sustainable client satisfaction.

Coaching differs from and complements financial planning, financial education

and knowledge sharing


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Steps in Financial Planning

The CFP Board of Standards specifies six steps of financial planning for CFPs:

establishing and defining the relationship with the client;

gathering client data, including goals;

analyzing and evaluating the clients financial status;

developing and presenting financial planning recommendations or

alternatives;

implementing financial planning recommendations; and

monitoring financial planning recommendations.

Impact of Coaching skills for every step of Financial Planning

Step 1: Establishing Client relationship

A critical step for both financial planning and general coaching. Creating a trust

environment where the Client feels that this process apart from being a rewarding

experience is also safe. Confidentiality is paramount for the success of both

financial planning and general coaching. The one critical benefit of Coaching in

this step is in comparison to the standard financial planning exercise, the impact

of emotions, values and goals would be addressed much more deeply and hence

the significance of trust and confidentiality.

Step 2: Gathering Client data, including goals

The significance of application of coaching methodologies in this step of financial

planning has the potential to elevate the exercise to a completely different higherlevel. While the normal financial planning exercise leaves the onus of identifying

the current reality and desired goal completely to the clients current thinking

process, coaching enables the client to go deeper into himself and encourages

self-discovery.


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In many cases, the current reality and the desired goals that come out after a

coaching process are significantly different, deeper and satisfying for the client

and sometimes even may be opposite to what was stated initially at a superficial

level.

Some of the key coaching tools that will aid in this step are

Coaching Tools Impact

Rephrasing /

Clarifying

Gives a Client a different perspective

from what he/she has stated

Wheel of life / Life

Planning

Enables the Client to have a holistic

perspective of his life to understand hiscurrent reality and actual desired state.

Expands awareness.

Limiting beliefs

Helps the Client to expand his

perspectives overcoming identified

limiting perspectives

Visualisation

Helps the Client to identify actual needs

and true vocation

The financial planning exercises prime objective is to clarify and identify the

Clients relationship with money. But the relationship with money, typically is a

much bigger thing. Childhood attitudes, emotions, current relationship with other

people, perception of self, values etc., play a big role in determining the

relationship with money. So understanding the relationship with money could

very easily lead to a process of clarifying and understanding relationship with

ones true self. Coaching process helps in this.

For e.g., in the coaching process, the question

Are you using your resources including money intentionally to achieve your

highest goals? sets the mind in the process to seek clarity.


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Step 3: Analyzing and Evaluating Clients financial status

The significance of coaching discussed in the previous step has a huge bearing

on available options and hence more clarity is available. The financial planner is

technically skilled in financial products and has a fairly detailed financial

knowledge. One of the objectives of the financial planner is to educate the client

the basic financial knowledge. The significance of coaching process sets the

clients mind ina right perspective for learning resulting in personalised teaching

and personalised learning. The coaching process establishes a need for the

specific knowledge and hence the client is receptive to the teaching need

based learning.

Coaching process encourages the client not only to focus on current perceived

needs but to honour who he/she truly is and can be.

Step 4: Developing and presenting Financial Plan

This step is a technical activity from financial plannings point of view and though

coaching process is not going to have a direct impact, it enhances the quality of

the plan as it would be made with an in depth understanding of the Clients

needs, as facilitated by the coaching process.

Step 5: Implementing Financial Planning recommendations

THE crucial step in the financial planning process, wherein the recommendations

made in the financial plan needs to be implemented. There are many instances,

where the financial planner could be required to do this activity as a one time task

and the onus of maintenance with the client thereafter. However, the ongoing

nature of the coaching process, could prove crucial in the success of the plan.


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Relationship with money, the heart of the financial planning process, ends up

being bigger than that for most clients. The expanded awareness and greater

clarity of self and true vocation bought forth by the coaching process would have

highlighted certain ongoing behavioral changes for the Client.

The ongoing nature of the coaching process proves to be a great benefit, in

ensuring the identified behavioral changes are sustained and does not fizzle out.

Step 6: Monitor Progress

The ongoing nature of coaching brings better focus on monitoring progress. The

constant probing keeps the client engaged with his self and creates a feedback

mechanism to monitor deviations from expected actions.

Questions like

Were you able to follow-up on stated actions?

If yes, how does that make you feel?

If no, how does that make you feel?If no, what were the major causes/impediments for inaction?

What kind of support could be provided by the coach to increase focus on

action?

Goes a long way in achieving better end objectives, normally may not be in the

domain of regular financial planning.


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Case study: Feedback from a Client, after coaching based financial

planning exercise

The sessions have gone so far beyond my initial objectives. Though I

started off with the objective to be able to manage my finances better, it

has been an extraordinary journey which has taken me from steady

practical progress to new worlds of self-discovery. The 'little stuff' has

been life changing: bank statements, mortgages, tax benefits, systematic

investment plans, filing things, knowing what's in our accounts, managing

a house-hold budget, sorting and separating our finances. Understanding

that money is not maths.

The 'bigger stuff' has been quite magical. the wheel of life - Life Planning

process has been one of the most inspirational and valuable things I have

ever done. I've never felt greater clarity about my goals and who I am. I

found it truly transformational and have felt a great sense of presence and

calm after each session. Now when I look around I can realize everyone


Client

Relationship

Collect Data

Including

Goals

Analyze CurrentStatus

DevelopFinancial Plan

Implementthe Plan

Monitorprogress

Overlaps with coaching. Coaching deals

with emotions and hence deeper

Critical value enhancement from

coaching. Wheel oflife, visualization and underlying

beliefs expands perspective

Coaching creates more options

because of expanded perspective

Action focus and behavioral

changes for relationship withmoney better served with

ongoing coaching process

Coaching provides better

framework to monitorprogress.


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has emotional baggage surrounding money and are not even aware of

them.

Interestingly, the different investment products etc., that I thought would be

daunting was very simple to understand and I was able to easily accept

that investments dont talk about guarantees but about probabilities. I

guess, I had become quite keen to understand also. I understood quickly,

how having more credit cards is actually credit negative even if there are

no annual fees and that I would term that as a big benefit.

But the biggest surprise to me, is how the sessions have made me bold

enough to pursue my passion in photography. The changes and benefits

have been surprising, multi-layered and intertwined. I have significantly

more confidence overall and a greater sense of self-efficacy. All sorts of

things have started falling into place that seemed unconnected to my initial

objectives

Conclusion

Generally coaches address issues of emotions, values and goals more deeply

than traditional planners, and coaching allows for a greater emphasis on client

accountability.

Traditional financial planners might be viewed as being more technically

and advice-oriented, while coaches more process-oriented.

Planners create task-oriented documents (financial plans) that enable

clients to carry out specific actions on their own. Coaches provide support

to clients to help them implement their plans.

Planners and coaches also differ in the nature of their relationships with

clients. Planners tend to operate on a professional-client relationship basis


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around the development of a plan, while coaches work under a more

collaborative model involving regularly scheduled sessions.

Both types of relationships can be ongoing, but the focus is different.

Planners provide the tools for clients to reach their goals, while coaches

give clients the support and motivation to ensure that their goals are

realized.

While many clients of financial planners may only seek and receive one-time

advice and written recommendations, professional planners tend to prefer

ongoing relationships with clients with regular contact (at least once per year).

Planners seeking to enhance their relationship with clients may be trained

explicitly as coaches. Having the combination of the technical skills of a financial

planner and the facilitation skills of a coach would prove to be more successful

for a growing number of planners. By acquiring coaching designations, planners

can attract new clients into their services, provide more intensive services (often

producing more revenue), and receive more personal fulfillment from their work.

Documents

Research Paper: Rajanikanth Chandrasekar Coaching and Financial Planning