Against a backdrop of increasing investments in financial empowerment work, stakeholders are increasingly looking for evidence of quality; one key step to demonstrating quality is field consensus on how to define, hire, train and develop qualified financial counselors. As a contribution toward building this consensus, the Cities for Financial Empowerment Fund (CFE Fund) is studying counselors in seven cities1 with well-established, municipally-led Financial Empowerment Centers (FECs). This essay details what those professional counselors deemed most critical to their success.

 

In 2012, the CFE Fund launched a national replication of the FEC model, first pioneered by the New York City Department of Consumer Affairs’ Office of Financial Empowerment. The FEC model centers on one-on-one financial counseling to assist individuals in meeting long-term financial goals, delivered by qualified financial counselors; counselors must take a required training course, often offered in partnership and for credit with a local college or university. Each counseling session starts with a detailed financial health assessment, dedicated to capturing and understanding the client’s full financial picture. Counselors then work with clients on one or more of four key service plans – credit, debt, savings, and banking – and client progress is measured through rigorous outcomes.

 

Our research looked to break out counselor observations of critical core competencies
 and how they obtain these competencies in order to assess and inform the Financial
Empowerment Center approach to counselor recruitment and hiring, training, and staff development. In this first phase of research, 65 counselors interviewed each other and shared notes on critical competencies; the CFE Fund’s research partner conducted additional in-depth interviews with selected counselors. Three themes emerged as critical to hiring and training approaches. FEC counselors: confirmed that credit and debt skills, along with relationship-building abilities, were most critical to their successes with clients; reflected that these skills came almost equally from both past experience and on-the-job training; and cited financial expertise and techniques for motivating clients as their priorities for their own further professional development.

 

Core counselor financial competencies: credit and debt

As the FEC hiring and training model begins with key financial competencies, counselors were interviewed about these critical skills. In interviews, counselors prioritized the importance of proficiency in addressing credit and debt for those with low incomes. Counselors repeatedly noted in interviews that these topics dictate much of their client’s financial circumstances, with a major effect on their clients’ lives. They described numerous examples of applying their skills and knowledge to addressing client challenges with credit reports, credit scores and debt as well as being able to explain these topics to their clients. Counselors also highlighted in their interviews that credit and debt skills and knowledge were critical to addressing disputes and negotiations, particularly for student loans and other credit products and tools.

 

Next on the counselors’ noted expertise priorities for obtaining results for clients was budgeting acumen, including also the importance of their ability to explain budget concepts and the use of budgeting tools to clients.

 

Counselors also highlighted their need to successfully support client goal setting, describing the following sequential skills:

• identify clients’ goals and desires;
• help clients make their goals realistic;
• give clients an action plan, with attainable and prioritized steps;
• coach clients to start and finish their goals.

 

Counselors also detailed needed expertise for assisting clients successfully with banking access. Counselors in their interviews cited a range of knowledge, including understanding how the banking system works, developing relationships with banks and credit unions, and assessing various banking products.

 

Interpersonal qualifications: focus on relationships and personal characteristics

The CFE Fund’s FEC model also emphasizes the development of interpersonal, “soft” skills in the hiring and training of counselors. When asked what skills enabled them to help clients achieve results, every counselor interviewed said their ability to build relationships and rapport was critical, mentioning specific skills and behaviors in three categories:

• Skills and behaviors pertaining to information flowing from client to counselor; as one said, “good listening produces more outcomes because you tap into the client's motivation.”
• Information flowing from counselor to client: for example, sharing personal experiences, accessibility, credibility, transparency, and engagement.
• Skills and behaviors designed to establish equality between counselor and client: for example, setting a shared agenda, letting clients find their own solution, and identifying common bonds.

 

Nearly three-quarters of counselors interviewed described personal characteristics which make them effective. Nearly half cited empathy as key to their success. Being non-judgmental and having patience were also frequently cited in counselor interviews, followed by honesty, respect, and having a calm and reassuring attitude.

 

Related to relationship-building, many counselors also attributed client success to how they deliver the financial content of the counseling session. They emphasized the importance of providing encouragement, focusing on achievements, and knowing when and how to push.

 

Counselors also noted their need to tailor these approaches to individual clients. For some, an action-oriented approach was key to client results, including giving clear instructions and assignments, while for others a more passive “counseling type” approach was more effective. Many counselors also cited the need to be able to confirm client’s accurate takeaways from sessions, supporting clients to be able to paraphrase what they had learned.

 

Skill acquisition from a combination of prior experience and on-the-job training

Financial Empowerment Centers emphasize the importance of experience when hiring financial counselors, with post-hiring training courses designed to fill in gaps in knowledge, as well as to ensure consistency in counselor approach. When asked about the primary source of their financial expertise, nearly half of the counselors cited their prior work experiences. Such work experience ranged from banking or financial institutions to personal financial counseling to small business counseling or entrepreneurship organizations. That said, nearly as many counselors instead cited on-the-job training during their tenure at the FEC program, including the FEC-mandated university course, as the source of their financial expertise. Finally, while on-the-job acquired experience was also cited as important, far fewer interviewed counselors cited this as a primary source of their expertise.

 

Additional secondary sources of financial expertise cited by counselors interviewed included: independent research (e.g., reading books); networking and building relationships with experts; life experience (e.g., buying a house themselves, using a budget, learning the financial system as a new immigrant); and formal education (e.g. degrees in accounting and economics).

 

Life experience and learning from family members were cited by counselors as relevant to their expertise. However, these personal sources were ascribed two and three times more frequently as sources of interpersonal qualifications rather than sources of financial expertise.

 

In addition, many counselors said they honed their interpersonal skills from the clients themselves, sometimes even asking clients if resources are helpful or approaches are comfortable.

 

Universal demand to add more financial expertise

Given the changing nature of the consumer financial marketplace, the CFE Fund emphasizes the importance of ongoing professional development. In interviews, every counselor mentioned needing more financial expertise, particularly citing credit and debt. Other areas of desired professional development listed by counselors include: saving and investing, public benefits, employment training programs, building relationships with banks, and taxes.

 

Interpersonal skills which counselors would like to develop further include tools for motivating clients and skills for retaining clients. Counselors also desire training on basic psychological concepts, information on cultural competency, and help acquiring active listening skills.

 

Finally, nearly half of the counselors discussed their desire to develop their business skills, especially negotiating tactics, management training, and advocacy. Approximately a quarter of the counselors also want to develop more computer skills.

 

Conclusion

Professional Financial Empowerment Center counselors across multiple partner cities were both reflective and specific in their interviews regarding a range of competencies, both content-related and interpersonal, that they feel are critical to their ability to help clients achieve meaningful financial results. Counselors also emphasized and prioritized the importance of additional training and knowledge, focusing on both financial content expertise as well as tools for motivating clients. As the CFE Fund and the broader financial empowerment field look to develop definitions of quality in financial counseling, the clear themes that emerged from those with extensive counseling experience can presumably serve as a valuable guide.