August 2017
Lucy Gorham & Jess Dorrance

According to a recent census, the field of financial coaching includes over 450 programs providing coaching services across the U.S.⁹⁷ One of these is Catalyst Miami, which offers a range of services, including financial coaching, to improve the financial and physical health of families and communities in Miami-Dade County in Florida. A key part of their mission is to build the financial well-being of households and communities by offering services such as free tax preparation, credit building and saving opportunities, and comprehensive financial coaching.

Financial coaching assists individuals to achieve improved financial security and well-being. Although various definitions of financial coaching exist, it is typically understood to incorporate a few key elements. These include identifying a financial goal, developing an action plan to achieve it, and following through on that plan.⁹⁸ All of this is done with
the assistance of a coach to guide and support each stage of the process. Coaching is distinguished from financial counseling, another approach to enhance financial security, by being primarily client-driven rather than prescriptive, and working towards a goal rather than addressing a more immediate financial crisis.⁹⁹

Over the last decade, financial coaching has evolved from a fledgling approach to a professionalized field.¹⁰⁰ A recent element in this evolution is the inclusion of technology into the delivery of coaching services. There are multiple ways technology can enhance financial coaching – from virtual meetings (through Skype or Google Hangouts, for example) to text messaging used for appointment reminders or informal communication between coach and client to online platforms to deliver coaching content and resources.¹⁰¹ At Catalyst, coaches have begun to use fintech apps to enhance their coaching sessions and increase engagement with clients as they work towards their financial goals. Catalyst recognized that traditional banks were not necessarily meeting their clients’ needs and felt they had an opportunity. Catalyst’s Chief Executive Officer, Gretchen Beesing, stated, “…traditional banking does not meet all of the needs of our client base, so here’s an opportunity to test new things, see how it can enhance our coaching model. And our coaching team was eager to incorporate fintech apps, they loved it, started playing with the apps right away when they became available, and so we went from there.”

Catalyst Miami approaches its work with innovation and experimentation in mind. Additionally, they have an office co-located at Miami-Dade Community College and a large number of their clients are young and tech-savvy. These two pieces together made the incorporation of technology into their services fairly smooth and felt like a logical extension of their mission.

Along the path to integrating fintech tools into their services, Catalyst has discovered some important lessons that include the following:

• Financial apps are a supplement to enhance coaching. Apps act as a tool for helping clients reach their goals, but the coaching relationship remains central to the experience with clients.
• Initial vetting of apps is critical. For Catalyst, this means that coaches test out apps to assess functionality, ease
  of use, versatility, etc. Often, coaches are using the apps themselves well before suggesting them to their clients. In some cases, coaches even reach out to app developers directly to obtain additional information about the app and its viability.
• Having a model for how and when you introduce an app to clients matters. Building trust and rapport between
  coach and client is essential, and must happen prior to introducing an app for the client to consider. In talking with a Catalyst coach, he expressed concern about presenting an app too early in a coaching session. He explained:

"For me and for our coaches, we tend not to do it [introduce an app] at the beginning of the session, only because that’s most of the relationship building. It’s that building trust part of it. You’re really just hearing people’s stories, and active listening, and that’s where you build the trust, and you don’t want to seem like you’re selling something when you’re presenting a valuable tool.”

• A guided onboarding with a coach can ease the sign-up process. Coaches typically review and download
  an app with a client during a coaching session and work with them to complete the sign-up process. This guided onboarding allows clients to ask questions or deal with issues that may have otherwise prevented them from enrolling. Before ending a session, coaches often assign “homework” related to the app, which increases engagement with the app and the coaching sessions more generally.
• Offering clients too many apps may be counterproductive. Consistent with some behavioral research which suggests that too many choices can overwhelm consumers, coaches typically suggest only a few apps for a client to consider using. Additionally, many of Catalyst’s clients have limited storage space on their phones which impacts the number of apps that can be downloaded on their device. Coaches are careful and deliberate in their app suggestions to best match clients’ needs while keeping in mind other potential constraints.
• Coaches must monitor changes in apps to keep clients informed on an ongoing basis. While incorporating
  existing fintech apps into coaching services can be an inexpensive added value in terms of program costs, coaches must be willing and able to devote time - in addition to their already demanding schedules - to monitoring changes or upgrades to apps in order to keep clients informed. In some cases, changes to an app may require that coaches and clients re-evaluate if the app remains a good fit towards achieving their goals.
  For example, if an app was offered free-of-charge when a client started using it, but now charges a monthly fee, coaches and clients can work together to determine if the client should continue utilizing the app and what their other options might be.
• Practitioners must strike a balance between automation and individual in-person interactions. While fintech
  may provide a mechanism to streamline, or even automate, aspects of financial coaching, clients still rely on direct, in-person interactions with a coach. This is a potential area of future research to determine where and how technology can best enhance coaching services without stripping away the most critical component of the coaching experience.

⁹⁷ This number reflects the number of responses to the census. There are likely more organizations offering coaching services that did not participate in the census. Lienhardt, Hallie. Financial Coaching Census 2016. Asset Funders Network and Center for Financial Security. Accessed online: http://assetfunders.org/ages/pages/AFN_Financial_Census_Brief_2016.pdf
⁹⁸ Collins, J. Michael, & O’Rourke, Collin. The Application of Coaching Techniques to Financial Issues. Journal of Financial Therapy, 3 (2) 3. Accessed online: https://doi.org/10.4148/jft.v3i2.1659
⁹⁹ Ibid.
¹⁰⁰ The Cities for Financial Empowerment Fund. The Professionalizing Field of Financial Counseling and Coaching: A Journal of Essays from Expert Perspectives in the Field. http://www.professionalfincounselingjournal.org/assets/cfe-fund-professionalizing-field-of-financial-counseling-and-coaching-journal2.pdf
¹⁰¹ Collins, J. Michael., & Lienhardt, Hallie. Using Technology in Financial Coaching. Center for Financial Security. Issue Brief 2014‐6.1 Accessed online: http://fyi. uwex.edu/financialcoaching/files/2014/06/tehnology-in-coaching_6_20141.pdf.

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This article is an excerpt from the UNC Center for Community Capital report Catalyzing Inclusion: Financial Technology & The Underserved.