"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 CNBC.com