The Guardian

Could a money coach get your finances in shape?

Enter a new breed of ‘personal trainers’ with a more user-friendly, holistic approach to how we spend.

Laura Whateley reports

Dharmesh Patel was sceptical about how much he would get out of sessions with a money coach. “I thought it might just be about budgeting – how to manage the pot that I’ve got – but it was much more holistic: less about trying to grow your personal wealth, and more about thinking about your financial health and wellbeing.” The 31-year-old from east London is now a convert: “I couldn’t recommend it enough.”

He saw an advert through work for the option to see a money coach, paid for via a salary-sacrifice scheme, which meant it worked out at about £12 a month.

“My wife, Francesca, was pregnant. Things change a lot with money when you have a child, but it’s easy to fall into a trap of just managing things as you always have done.”

He says it was valuable to have an independent person reflect on what they were doing already, and what they could improve. Over five sessions, the couple received help with reviewing their outgoings and savings, and thinking about how to manage the cost of getting a child through nursery, and what safety net they might need.

The life, business and career coaching industries in the UK are booming, and it’s perhaps no surprise during a cost of living crisis that there has been an increase in the number of people offering their services as money coaches, and a rise in customers for them.

They are often marketed as being like a “personal trainer” for your finances, and a more affordable, accessible, lower-key alternative to traditional financial advice.

There are a number of providers out there, from independent sole traders to bigger companies, and it is increasingly being offered by employers as a staff benefit. But what do you get, what do you need to watch out for, and is there free help you can access that means you don’t have to hand over cash?

What a money coach will not, and cannot do, is recommend specific financial products and services, or invest or manage your pension on your behalf. They are able to offer only “guidance” rather than financial “advice”, the latter of which should be regulated by the Financial Conduct Authority (FCA). This means a coach is less suitable for those who need help navigating the complex landscape of, say, retirement or tax management.

The FCA is yet to regulate the industry, so tread carefully.

Patel signed up to his face-toface sessions through Octopus MoneyCoach, a business set up to tackle the issue of people wanting one-to-one support from a money expert but feeling priced out of the market, says Adam Price, its chief executive.

At Octopus you get a free first session to try the service, ask some questions and discuss personal goals. There is then a charge of just under £25 a month for a 12-month subscription if you sign up.

It also offers the service as an employee benefit, where businesses will either pay for it for their employees, or let employees use salary sacrifice, which means the fee is deducted before tax, at about £14 to £17 a month.

“As the cost of living pressures began to mount, more workplaces signed up last July and August than in the first six months of the year,” Price says. “We’re launching to nearly 10,000 new employees and signing five times more workplaces every month than a year ago.”

Patel and his wife were encouraged to create a checklist of money to-dos, from getting a will, to researching life insurance and critical illness cover, considering pensions, and saving for a child’s future. “Every month or so, we would get a reminder of tasks.”

An unexpected benefit was scheduling time and space to look at what they have, think about what they want to achieve over the next couple of years, and create a solid foundation to build upon.

Patel says it is hard to be realistic about your finances “until you’ve

gone through every transaction you are spending on, been honest with yourself, done that analysis – ‘I’m worried about not being able to pay the electricity bill but I’m spending £50 a month on coffee.’ Plus having some accountability. That’s what coaching did for me.”

Claro Wellbeing is another money coaching service offered mainly via workplace benefit schemes. Mike Barrow, the lead financial coach, says the main aim is to help people develop a plan to reach their financial goals, and execute it themselves.

“This might include buying a first home, saving for a wedding or getting started with investing. A coach can help educate people to better manage their money, empowering them to make smart decisions and develop a positive money mindset.”

He says a certified, insured and experienced coach would typically charge in the region of £60 to £80 an hour. Wellbeing works with companies to provide coaching to employees, starting from £3.49 an employee per month.

However, the sector’s rapid growth has prompted concern in some quarters. Alison Blackler, a life coach based in Wirral, is concerned that anyone can call themselves a coach despite having little experience.

Before turning to coaching, she was a counsellor in the NHS for 25 years. “It is really important for the client to do their own due diligence to ensure they are working with someone who is competent in coaching skills, as well as finance.

“As a qualified therapist, having trained for years, I worry about people calling themselves coaches because they can, or have been on a coaching course for a few days. A coach needs to know how to create a safe space for their client to explore and grow. My concern is that advice will be given, and this may not be right for the client.”

There have been some moves towards trying to help consumers find well-qualified coaches.

The London Institute of Banking & Finance has recently introduced the first accreditation for money coaching companies where, says John Somerville, the head of financial services and professional education at LIBF, “they have evidenced that they have put the right training and structures in place.

“That helps ensure consumers will receive a good-quality service while being clear that the guidance they provide won’t be the same as that provided by a regulated financial adviser.”

You can search for accredited coaching programmes at libf.ac.uk.

VouchedFor, which matches advisers with people seeking help, has also started recognising financial coaches for the first time.

Another option is to pick a money coach who also has formal financial advice training and qualifications.

Catherine Morgan is a qualified financial planner, as well as a certified financial coach, and the founder of the Money Panel, which is one of the few money coach training companies in the UK.

She suggests you get to know a coach’s background and qualifications, seek out testimonials, and ask the coach for information if you are unsure.

• Free help and advice

When it comes to taking money from pension pots, try Pension Wise, run by the governmentbacked MoneyHelper service, which offers free, impartial advice to over-50s. It aims to help with the various options involved in pension pot withdrawals.

Appointments last about 60 minutes. It’s usually done over the phone, but a limited number of face-to-face appointments are available.

You have to be 50-plus and have a UK-based defined contribution pension pot (this could be a personal or workplace pension). It doesn’t matter how small your pot is. Go to moneyhelper.org. uk/en/pensions-and-retirement/ pension-wise.

If you are under 50, or only have a “defined benefit” pension, there is still help on offer. Call free on 0800 011 3797 or use the webchat.

If you are struggling with debt, there are lots of free advice services across the UK that can help.

They include StepChange Debt Charity, Money Adviser Network, National Debtline, PayPlan and Money Wellness.

Many offer easy-to-use online advice tools or free live chat.

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2023-03-25T07:00:00.0000000Z

2023-03-25T07:00:00.0000000Z

https://guardian.pressreader.com/article/282252374777947

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