Financial coaching and financial therapy

Financial Coaching

Georgia Consortium

February 26, 2015

Atlanta Financial Psychology Mary Gresham, Ph.D.

APA Stress In America


In the last year


The stress gap


Stress management


Women and Money Stress


Stress response


• Give money

Financial interventions


• Give money

• Debt counseling



• Give money

• Debt counseling

• Self-help group



• Give money

• Debt counseling

• Self-help group

• Financial literacy



• Give money

• Debt counseling

• Self-help group


• Financial coaching



• Give money

• Debt counseling

• Self-help group


• Financial coaching

• Financial therapy



What is coaching?


What Coaching Is Not


• Lead

Sports Coaches


• Lead

• Motivate

Sports Coaches


• Lead

• Motivate

• Guide

Sports Coaches


• Lead

• Motivate

• Guide

• Instruct

Sports Coaches


• Lead

• Motivate

• Guide

• Instruct

• Discipline

Sports Coaches


• Lead

• Motivate

• Guide

• Instruct

• Discipline

• Mentor

Sports Coaches


• 1980’s

History of coaching


• 1980’s

• Evolved out of corporate

world

History of coaching


• 1980’s


world

• Help employees develop

skills, engagement

History of coaching


• 1980’s


world

• Help employees develop

skills, engagement

• Improve the business

History of coaching


• 1990’s explosion

History of coaching



• New fields of coaching (life,

wellness, relationship,

career, etc.)

History of coaching



• New fields of coaching (life,

wellness, relationship,

career, etc.)

• ICF developed certifications

History of coaching


• Estimate 50,000 identify as

coaches worldwide

Current



coaches worldwide

• No certification required

Current



coaches worldwide


• Limited research base

Current



coaches worldwide



• Flexible models, locations

Current



coaches worldwide



• Flexible models, locations

• Low stigma

Current


Coaching


Coaching


Coaching


Coaching


Coaching


Coaching


Coaching


Coaching


Coaching


Coaching


Client readiness


Coaching


Coaching


Coaching


• No research base

Private $ coaching



• Expensive

Private $ coaching



• Expensive

• Private market

Private $ coaching



• Expensive

• Private market

• Buyer beware

Private $ coaching


• 2009 study of 2100 clients

Effectiveness of private

coaching



• Female, middle age,

educated, 80K mean income


coaching





• Primary goal: Self confidence


coaching






• 3% financial goals


coaching







• 27% financial benefit


coaching







• 27% financial benefit

• 96 % would do it again


coaching


• 2010 use of “signature

strengths” predicted goal

progress in 240 college

students


coaching


• 2013: Study of 18 studies in

organizations


coaching



organizations

• Coaching increased goal

attainment by 70%


coaching



organizations


attainment by 70%

• Coaching significantly

improved specific skills


coaching



organizations


attainment by 70%

• Coaching significantly

improved specific skills

• Moderate effect: work

attitude, well-being, coping


coaching


Coaching Low Income


• Pilot studies:

• Central New Mexico

Community College

• Financial Clinic of NYC

• Center for Working Families

Effectiveness of financial

coaching


• Pilot studies:

• Central New Mexico

Community College

• Coaching helped students

adhere to a budget


coaching


• Financial Clinic of NYC

• Coaching clients significantly

more likely to have a goal

and feel confidence about

achieving it.


coaching


• Center for Working Families

• Coached more likely to pay

more than minimum

balance, save and pay bills

on time.


coaching


• A. Financial services provider

• B. Only ICF certified coach

• C. Mental health professional

• D. Anyone

Who can be a financial coach?


What is a financial coach?


• Beliefs and emotions block

behavior change

When coaching does not work?



behavior change

• Unmotivated/unready to

change




behavior change


change

• Functional impairments




behavior change


change

• Functional impairments

• Coach/client mismatch



Financial therapy is the study

of the cognitive, emotional,

behavioral, relational,

economic and integrative

aspects of financial health.

Financial Therapy


The Money Taboo

Atlanta Financial Psychology Atlanta Financial Psychology

Sigmund Freud

Money matters are

treated by civilized

people in the same

way as sexual

matters….with

inconsistency,

prudishness and

hypocrisy.


“Remember a few years ago when everything was sex, sex, sex?”Atlanta Financial Psychology 77

The Problem with Financial

Literacy


money

Atlanta Financial Psychology 79

Schemas

• Thoughts and behaviors we use to simplify the complex


Schemas


• Memories, feelings, decisions, core beliefs that are mostly unconscious


Schemas



• Efficient


Schemas



• Efficient

• Find confirmation for them


Schemas



• Efficient

• Find confirmation for them

• Developed in childhood when we do not have cognitive ability to process complicated constructs like money


• Money Avoidant

• Money Centric

• Relationship

3 Types of money issues


Common money avoidant

schemas

• Money is not important

• It’s not nice to talk about money

• Money is bad, dirty

• I don’t really need/deserve money

• I don’t like rich people and don’t want to be like them

• Money is the man’s job

• The universe will provide for me


• Denial of money’s function

• Guilt/shame about having

money

• Under earning

• Risk avoidance

• Task refusal

Money avoidant


• More money will make things better

• I deserve to have money

• I deserve to spend for what I want

• Money gives my life meaning

• Net worth=self worth

• You can’t trust people when it comes to money

• Spending money is showing love and caring

• There’s can never be enough money

• Work hard and you will have money

Money centric schemas


• Workaholic

• Excessive risk taking

• Hoarding, miserly

• Compulsive

spending/shopping

• Neglect of relationships,

feelings

Money centric


• If I give money then others will love and care for me in return.

• If I give my children what I never had, they will have a better life.

• If I can afford it, why not spoil them?

• You should always have a secret account

• It will just upset things if he/she knows how much I spent

• Don’t tell your mother/father how much things cost

• It’s not my job to look after the money.

• I don’t want to have to take care of myself

• I deserve to be supported

Relationship schemas


• Financial infidelity

• Financial incest

• Financial

dependency/regression

• Financial enabling

Relationship issues


• A. Financial services provider

• B. Mental health professional

• C. Accredited financial

counselor

• D. Anyone

Who can be a financial

therapist?


Financial Therapy Association


Who can be a financial

therapist?


• Great potential to help

Financial Coaching/Therapy



• Clients benefit from

individualized approach






• Clients enjoy the

focus/attention






• Clients enjoy the

focus/attention

• Effective when other

interventions are not



• New fields



• New fields

• Lack of professional

definition and licensing



• New fields



• Consumer confusion



• New fields




• Training issues



• New fields




• Training issues

• Small research base



Thank you







Economy & Finance

Financial coaching and financial therapy