Unfortunately, money management strategies often aren’t adequately taught in schools, and half of Americans are considered financially illiterate. Many people simply don’t understand good money habits, and that’s why financial coaching is an important service.
Financial coaches can help people learn valuable money management skills like budgeting, saving, repaying debt, and building credit. Coaches educate their clients about their daily financial behaviors, helping them develop better money habits and work toward financial stability.
If you want to help others achieve financial stability, starting your own coaching business may prove a rewarding career. The barriers to entry are fairly low, and you can help your clients measurably improve their lives. Here are seven steps to starting your financial coaching business.
Step 1: Develop Your Financial Expertise
Organizations like the Association for Financial Counseling & Planning Education (AFCPE) and Fincert provide education and certifications that can help establish your financial bona fides.
Most certifications require you to complete coursework and pass exams as well as complete ongoing education and pay annual fees to maintain your certification year-to-year. A college degree isn’t required, but a foundational financial education is beneficial to ensure you’re prepared to support your clients.
Step 2: Define Your Niche and Target Market
Determining your niche and target market helps you define your business. For example, you may focus on working with clients of certain age groups and backgrounds, or with specific needs such as family planning. Whatever your target market is, defining it early on can help you tailor your services and messaging.
You may also have specialized services that meet specific needs. Examples include:
- Credit management: Educate your clients about how credit works and create a credit management plan to build their credit scores.
- Family budgeting: Help families establish a budget and plan for long-term financial goals like saving for college.
- Small business finance: Work with small business owners on the unique challenges they face when balancing a business with their personal finances.
Step 3: Create a Business Plan
Your business plan acts as a roadmap that guides you toward success. It should outline your company mission, target market, services, pricing, marketing strategy, and financial projections. It doesn’t need to be an extensive document that plans for every possible outcome, but it should provide you with clear directions for taking your business where you want it to go.
You also need to choose the right business structure; here are some common options for small businesses:
- Sole proprietorship: This business entity is owned and managed by a single person. There is no legal separation between you and the business, which means you take all the earnings, and you are responsible for all financial obligations. These entities are easy to set up but are mixed up with your personal finances.
- General partnership: This entity is owned by two or more partners who share in the earnings and financial obligations with shared risk and responsibility and is mixed up with your personal finances. Partnerships are easy to set up but choosing the right business partner is crucial.
- Limited partnership: This partnership establishes a legal separation between the business partners and the business, with involvement from each partner depending on ownership percentage. This entity is often a good choice for multi-owner businesses that want to raise outside investments.
- Limited liability company (LLC): LLCs can belong to a single person, multiple owners, or even other corporations or LLCs. There is a legal separation between the business owners and the business. LLCs are easy to set up and provide legal and financial protection to the owner.
Choosing the right business entity depends on the ownership structure, how much separation you want between yourself and your business, the startup process, and more. You may want to obtain legal counsel or professional tax advice to help you choose the right entity.
Step 4: Choose the Right Tools for Success
You need to obtain the business solutions necessary to run a financial coaching business and manage your clients. Here are some of the tools you may consider investing in:
- Accounting software to track your income and expenses for bookkeeping purposes, tax reporting, and even billing management. For a startup small business, there are many low-cost options out there.
- A professional website that attracts clients, details your services, and provides other necessary information. There are many affordable website hosting and content management systems available.
- Client management tools such as Disco, allow you to manage client relationships, communicate with clients, and automate service offerings. In addition to traditional client relationship management (CRM) tools, Disco provides a suite of industry tools financial coaches need to be successful – including one-click credit report connection, automated disputing, and more.
⭐️ Learn More: Why Your Credit Management Business Needs the Right Software
Step 5: Build Your Online Presence and Marketing Strategy
You will need a strong online presence and an effective marketing strategy to attract clients and stand out from the competition. Start by developing a website that clearly outlines your services and provides strong calls-to-action (CTAs) to generate business leads.
You should also create a marketing plan that includes the following information:
- Definitions of your target audience, their needs, and your value proposition.
- The marketing channels you will use, including social media, networking events, local associations and groups, and more.
- A referral strategy to encourage recommendations from professional colleagues and satisfied clients.
- A communications strategy to stay in touch with your leads and clients. Disco allows you to send mass messages to your contacts directly for easy email automation.
Step 6: Streamline Client Management
As your business takes off, it’s important to have systems in place to manage your clients and operations effectively. The smoother you can make the customer experience, the easier it can be to focus on financial coaching and delivering value to your clients. Key areas to focus on include:
- Progress tracking: Make sure you’re measuring client progress and financial goals so that you can provide meaningful follow-ups in subsequent client sessions.
- Calendars: Make sure your schedule is organized so you never miss a meeting, and ensure you have an easy system for your clients to schedule sessions with you.
- Client activity and billing: Use automation tools to track client activity, bill clients, and accept payments smoothly.
- Client services: Tools such as Disco all-in-one software can help you automate your services, implement credit management projects, communicate and share information with your clients, and take care of administrative tasks.
Step 7: Provide Consistent Value to Clients
The key to a successful business is client retention. Satisfied clients can turn into long-term clients and provide referrals that grow your business. You can keep your clients happy by delivering consistent financial education and services that are personalized to their specific needs. Ensure that your financial coaching is flexible enough to meet each client where they are and provide them with actionable advice that can achieve real results.
It’s also important to keep up with financial trends and the latest financial coaching strategies. You can do this by maintaining any certifications you hold, staying current with financial news and money management strategies, and looking for ways to enhance your business and stay competitive.
Financial Coaching FAQs
Here are some answers to common questions about financial coaching.
What does a financial coach do?
Financial coaches help people build better financial habits and provide guidance on everyday money management. They may also assist clients in setting financial goals, paying off debt, building credit, and saving for the future.
What makes a good financial coach?
Good financial coaches have a solid grasp of foundational money management strategies and are comfortable working directly with clients to deliver personalized financial guidance. They also have the right combination of experience, education, and knowledge to deliver sound economic advice.
Is there a need for financial coaching?
There is a strong need for financial coaching because many people struggle to manage their money and achieve financial stability. With so many people facing difficulties, financial coaches can make a positive impact on the lives of their clients by helping them take control of their finances.
Bottom Line
Starting a financial coaching business is a great career choice for someone with the desire to help people achieve better financial outcomes (and the knowledge and expertise to deliver value to their clients). By developing your financial knowledge, identifying your niche, creating a solid business entity and business plan, and using the right tools, you can build a successful financial coaching career.
Take Your Financial Coaching to the Next Level with Disco
Disco offers an all-in-one CRM platform designed specifically for financial coaches, streamlining everything from secure document sharing to automated dispute letters. With features like one-click credit report connection and customizable workflows, managing client information has never been easier. Simplify your operations and maximize your impact with powerful tools built to support your business success. Get started with Disco today and experience a CRM tailored to your needs!