Description of the programme

The two programmes studied were well-established financial coaching programmes serving lower-income consumers in two very different communities. One in Miami, Florida, where Branches, a faith-based social services organisation, offers a range of financial capability services broadly to the community. The other in New York City, where The Financial Clinic, a non-profit organisation, offers financial coaching, income tax preparation and legal support for working poor families.

Financial coaching is focused on the priorities and strengths of the consumer, with the goal of helping each client to make progress with the most important aspects of his or her financial life, i.e. coaching is tailored to individual client goals.

The average client attended 2.7 sessions at Branches and 3.1 sessions at The Financial Clinic. Sessions lasted 60-90 minutes and covered goals such as credit, debt, savings and planning for the future.

The study

This study allows, for the first time, a fully causal assessment of the impact of financial coaching (as distinguished from other financial education approaches that focus on teaching concepts) as practiced by two programmes on low and moderate-income consumers. From a pool of individuals who expressed interest in receiving financial coaching, half were randomly either offered the opportunity to begin receiving coaching services right away (the treatment group), or to access coaching services after the study was over (the control group). Overall, 945 people enrolled in the study: 514 from Miami, and 431 from New York City. A total of 479 of these were offered financial coaching, and 466 were assigned to the control group.

What are the outcomes?

• making saving deposits, paying bills on time, having a budgeting plan, levels of borrowing, saving amounts and credit scores.
• progress towards achieving financial goals, confidence, financial satisfaction and financial stress.

Key findings

Impacts reported in this study are based on data from three different sources:

• baseline and follow up surveys of participants;
• credit report data; and,
• administrative data from the coaching programmes (such as the frequency and nature of sessions for study participants).

The overall finding is that access to and participation in financial coaching results in measurable changes in financial behaviour and well-being. Financial coaching led to gains in three areas:

• financial behaviours;
• objective financial health metrics like savings, debt levels and credit score; and,
• subjective feelings of financial confidence and financial well-being.
• The study showed that, on average, people offered access to financial coaching, (compared to those not offered access to financial coaching):
• Were more likely to pay bills on time, increased frequency of savings deposits and were more likely to have a budget.
  • Increased savings by almost $1,200 in the New York City programme.
  • Reduced debt by over $10,000 in the Miami programme.
  • Increased credit scores by 21 points in the New York City programme.
  • Reported an increased sense of confidence in achieving their goals, increased financial satisfaction and reduced feelings of financial stress.

Consistent with the theory underlying financial coaching and its flexible and customised nature, the study found that financial coaches can materially help people achieve the financial outcomes that are relevant to their own unique goals and circumstances.

Points to consider

• The study is one of the few experimental studies - using a randomised controlled trial design - on financial capability approaches in general. In addition, the number of individuals in the study (945) is relatively large for a study of a direct service financial capability programme.
• The treatment group includes participants who were offered coaching, but who did not attend. The study therefore evaluates the causal impact of offering a coaching programme and so provides a conservative estimate of the impact of receiving coaching.

• Financial coaching is an emerging area of focus in the financial education field and this study allows, for the first time, a fully causal assessment of its impact.

The report emphasises that while the study shows coaching helps different clients in different situations achieve a variety of positive outcomes, it does not predict exactly which outcomes clients in other programmes will exhibit. The report concludes that further research is needed to explore the impact of financial coaching in different settings and across varied types of clients, as well as different variations in coaching practice.

• Explanations of different models (financial information, financial counselling and financial coaching) and details of the approach to financial coaching as applied in this study could be of wider interest to those developing financial coaching programmes.

Full report

Financial coaching: A strategy to improve financial wellbeing - full report