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Can financial coaching lead to financial empowerment?

Credit union employee speaking with member

Why the National Credit Union Foundation is partnering with Inclusiv to help more credit unions implement and enhance financial coaching, training and tracking.

For the first time in five years, the financial wellness of Americans declined in 2022. The already fragile state of the nation—where 66 percent of us were considered financially unhealthy in 2021—weakened a little more. According to the Financial Health Network, now just 31 percent of Americans are living a financially healthy life.

Exacerbating factors are in abundance (record inflation, the Great Resignation, countless ongoing effects of the global pandemic) and have prevented some credit unions from providing services they know could help—like financial coaching. A new partnership between the National Credit Union Foundation and Inclusiv aims to change that.

Credit unions can now apply for a grant that will pay to implement a Pathways to Financial Empowerment program at ten credit unions.

From financial education to financial coaching

Launched in 2015 by Inclusiv and Neighborhood Trust Financial Partners, Pathways integrates financial coaching into a credit union’s operations through technology, training and communications, and includes a digital platform to track effectiveness. Since its launch, 61 percent of participants improved credit scores, with an average improvement of 49 points.

“For a long time, the conversation focused on financial education,” says Ann Solomon, SVP at Inclusiv. “The theory was that if people were provided information about financial terms, then financial health and well-being would follow. Unfortunately, life isn’t that simple.

“People’s lives and financial behaviors are complex. None of us are completely rational, following exactly what we’re ‘supposed’ to do with our money. What’s more, a lot of financial product advertising is misleading, designed to trap borrowers in a cycle of debt. Credit union-based coaching programs can provide not only the information, but also the support, behavioral tools and access to safe and affordable financial services that people need to become more financially healthy.”

Repositioning and/or reskilling talent

Financial coaching, Solomon explains, enables member-centric guidance and interventions. It is one of the most effective ways a credit union can meet an individual where they are on their personal financial journey, and guide them through the opportunities and challenges ahead. But as credit unions with other successful coaching programs attest, it requires a shift in mindset and skillset.

Through intensive cohort-based training, Pathways streamlines upskilling. A benefit further boosted by the credit union movement’s cooperative principles.

“Our willingness to partner with one another, to share learnings and best practices, is a differentiator credit unions often overlook,” adds Solomon. “One of the most exciting aspects of Pathways is its cohort-based training. We’re building a nationwide network of coaches who are committed to improving financial well-being for all and following the same playbook. The potential for system-wide impact is huge.”

Measuring impact

In addition to the upskilling and education, Pathways makes tracking and measuring participants’ progress simple.

Solomon shares that providing tangible ROI was central during the program’s development. “Launching a holistic financial coaching program requires investment. We knew we had to make tracking the impact on a member’s financial well-being and product uptake streamlined, so credit unions could see the social and financial return their coaching was having on members’ lives and the credit union’s product deployment.”

Actions and outputs from counseling and coaching touchpoints, automated text message communications, and connectivity to credit union products and services are brought together in one platform, so credit union leaders can easily see and track the impact and effectiveness of their coaching programs.

Ensuring success

As part of the National Credit Union Foundation’s mission to catalyze change through credit unions, the grant opportunity will also enroll successful applicants in Inclusiv’s new Financial Empowerment Learning Center training.

Training delivered there will fully prepare credit unions to design a successful coaching program that’s integrated into their operations and tracks impact through the Pathways program.

What’s more, Pathways provides participating credit unions and the Foundation with detailed data on the profiles of members served, improvement in members’ financial well-being, including increases in credit scores and savings, as well as credit union product uptake.

Applications must be received by 5pm CT, Friday, Nov. 11, 2022. Apply now.

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