Australasian Accounting, Business and Finance Journal (Nov 2012)
The Financial Coaching Advice Model: An Exploration into how it Satisfies Expectations of Quality Advice
Abstract
For 20 years, the financial planning sector in Australia has been transitioning from a sales-orientated force to aprofession of qualified and skilled practitioners. Today, the potential for professional financial planning adviceto benefit Australians financially, economically and psychologically is recognised by government. Financially,these benefits include increased savings, less interest expense through faster debt reduction, higher investmentreturns and appropriate levels of insurance. Economically, a more financially literate society has the potentialfor less reliance on an already burdened social security system. Psychologically, the benefits include the peaceof mind that comes from an individual being confident in financial matters. However, despite this level ofrecognition and development, national surveys have reported that only a small percentage of the populationactually seek professional financial advice. The factors attributing to these low percentages included the gapsin financial literacy limiting an individual’s engagement in financial matters and consumer’s current mistrust ofthe financial advice business models that remain dominated by commission-driven product sales. Thesedeficiencies have led some financial planning firms to break from financial product sales as the primary advicemodel and focus on financial coaching. Exploratory interviews with the practitioners and clients of a selectedfinancial planning firm have generated insightful discussion into how a financial coaching advice model isachieving the financial, economic and psychological benefits recognised by government as the potentialoutcomes of professional financial advice. The aim of this paper is to present the findings from that discussionand demonstrate the opportunities embedded within a financial coaching advice model. It is argued that thisdiscussion offers a foundation for future research direction in an area currently under researched in academicliterature.
