Investor Toolkit

More advisors adding 'financial counseling' to services menu

The concept of "financial counseling" is making its way into mainstream financial advising.

The Association for Financial Counseling and Planning Education describes financial counselors and educators as helping clients "along a spectrum of knowledge through behavioral adjustments, with the hope of eventually referring them to investment advisers and financial planners."

Certified financial planner Sheryl Garrett, founder of the Garrett Planning Network, says she has "embraced a financial counseling orientation." Financial counseling, she said is "a shift away from the technical side to the human side — what's in people's lives, what can't be captured on paper, what they can get passionate about and stick to."

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The typical schooling for financial advisors is very technical, according to Garrett. While traditional financial advisors tend to ask very routine, segmented categories of questions around assets, liabilities, investments, insurance, wills and trusts and retirement savings and the like, the soft training behind financial counseling, by contrast — regarding communication, connectivity and trust-building — focuses on human capital, she noted.

"Our most important asset is our ability to make money, and our biggest liability is our penchant for spending it all," Garrett said. "That's the biggest area where a financial counselor can help."

Coaches motivate, and planners offer technical solutions, she noted. Employing the two approaches in a holistic way helps clients receive education and resources most relevant to them at a particular point in their lives.

Kris Boelte, managing member of Kristine A. Boelte & Associates, is a CFP and an accredited financial counselor, a certification offered by AFCPE. "I knew going forward that financial advice was becoming the critical component of the industry," she said.

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A financial counseling class in graduate school opened her eyes to the needs of clients at the other end of the spectrum, Boelte said. "If all you have is a Series 7, you have no experience in budgeting and income planning or leveraging tools, such as bankruptcy and credit counseling."

Boelte appreciated learning about how to provide psychological support. "The training shows you how to pull people out of that feeling of helplessness and hopelessness," she said. "Serving as a counselor conveys to them that you can get to the emotional roots of their situations."

Boelte provides a few sessions of financial counseling, often on a pro bono basis, as a value-added service to friends and relatives of clients, working with clients' children on issues such as job loss.

Jeffrey Tomaneng, financial advisor with Lincoln Investment, also holds both CFP and AFC certifications. Because the majority of his clients are public school teachers, he does more financial counseling than traditional financial planning with them, he said.

"The AFC training is a lot more aligned with my practice than some of the other designations," Tomaneng said. "The curriculum addresses many issues not necessarily addressed in the assets under management model, from a basic personal finance perspective.

"You work like a psychotherapist, digging into their daily financial habits," he added. "That doesn't fall into a typical financial advisor engagement."

The financial counseling enhances his ability to meet the needs of his clients in two ways, Tomaneng said. First, it allows him to be a "sounding board for all things financial," and second, it enables him to augment the quantitative conversation (e.g., cash flow and net worth) with the qualitative (e.g., personal priorities and values around what they spend on.)

What financial counselors do

● Educate clients in sound financial principles.
● Assist clients in overcoming financial indebtedness.
● Help clients identify and modify ineffective money-management behaviors.
● Guide clients in developing successful strategies for achieving financial goals.
● Support clients as they work through financial challenges and opportunities.
● Help clients understand the dynamics of money in relation to family, friends and individual self-esteem.

Source: Association for Financial Counseling and Planning Education

The results have been positive, Tomaneng said. "At worst, they're in a better position financially," he observed. "At best, they've paid off their debts, are in the black, making more investments and saving for goals."

Jeremy Heckman, CFP, AFC and a wealth manager with Accredited Investors, uses his AFC training to serve the firm's affluent client base as an internal consultant, sharing best practices and tools in areas such as debt and credit management credit reporting, HELOCs, and identity theft.

Financial counseling supports Heckman's firm in being more engaged with clients, he said. Heckman helps his colleagues understand what questions to ask, how to ask the right questions and how to respond to certain statements. Examples of pertinent questions include:

  • What are you feeling right now?
  • How do you think about money?
  • Do your values align with what you spend on?
  • Why did you pick that savings goal?
  • How will you act differently when you reach it?

What is the ripple effect of this approach? "Longstanding, stronger relationships, without a doubt," Heckman said. "More open communication about finances leads to better help, which leads to more trust and more referrals."

— By Deborah Nason, special to