What is a financial coach and who really needs one?

Want help figuring out how to buy a home or pay down debt? Clueless about budgeting? Just want a second opinion on your decision to retire in a few years or start your own business?

You might find it helpful to consult a financial coach. You may even have free access to one through your employer.

There's a fair chance your company might offer financial coaching -- or will soon -- especially if you work for a large organization. That's because many employers are trying to beef up their benefits in a bid to attract and retain employees.

Currently, 43% of employers say they offer "personalized financial counseling, coaching or planning," and another 35% say they're thinking about doing so, according to research by the Employee Benefit Research Institute in partnership with HR benefits consulting firm Mercer and others.

What does a financial coach do?

Financial coaches can offer guidance on many types of money issues and help you improve your money habits.

The role is part therapist and part financial guide, said Greg Ward, director of the finanical wellness research division of Financial Finesse, a coaching company that primarily serves the employees of Fortune 500 companies.

A coach helps you meet your financial goals by gaining an understanding of your financial situation, money behaviors and personality. They can then provide helpful education and resources, and empower you to make decisions confidently.

"[A coach's job] is to make sure the client understands their financial situation, and how it helps or harms them ... Then help them align their behavior with their financial vision," said Saundra Davis, founder of Sage Financial Solutions, which provides workplace financial coaching through Employee Assistance Programs, and also runs a financial coach certification program.

What coaches don't do is manage your money, make decisions for you or recommend specific investments.

What they might do, however, is help you navigate a set of options for your situation, and alert you to workplace benefits you may not know about. Or a coach might look at the funds in your employer's 401(k) plan, for instance, and indicate which ones best address your risk tolerance and time horizon.

"I'll help you understand what would be appropriate. But I will not say put 10% of your contributions in Fund A," Ward said.

Coaches at Financial Finesse don't sell any products to clients, which could be a potential conflict of interest for the coach, Ward said. For instance, a coach working for an insurance company may suggest one of its insurance products or may work for a 401(k) plan provider and recommend one of that company's IRA products. While the recommendation may be made in good faith, the coach could be blind to their bias. "It is important for [you] to know how the coach is compensated and what potential conflicts of interest may exist."

At Brightside, which serves primarily Fortune 1000 companies, the financial "assistants," as their coaches are called, don't sell products either. But they may research and present a number of potential solutions to address a client's current situation, said CEO Tom Spann.

For instance, that could mean helping them find state-provided subsidies for child care. Or it could mean helping them find a short-term emergency loan at credit card rates rather than predatory loan rates. They could also help arrange for the employee to pay off the loan through their paychecks. If the lender of the chosen loan pays a fee to Brightside, Spann said, the fee is put into a savings account for the client, in what he calls a "kick forward."

Then, when their loan is paid off, the client will have the option to continue putting at least part of what used to be their loan payment into a savings account to help them build a savings habit.

What qualifies someone to be a financial coach?

There's no universal set of requirements that must be met for a person to call themselves a financial coach, but many have related certifications, degrees or experience that help inform the work they do.

At Financial Finesse, for instance, all the coaches are certified financial planners, which means they have to have a bachelor's degree, taken requisite coursework, passed a CFP exam and completed 4,000 or more hours of financial planning work before getting certified.

At Brightside, about a third are CFPs and the rest are a combination of certified financial coaches, social workers or people who come with experience in other financial arenas such as student loans or credit counseling, Spann said.

If your employer does provide financial coaching as a benefit, ask the person you're thinking of working with what qualifies them to be a coach and what areas they specialize in to make sure they will be a good fit for you.

How it works

Coaches aim to have sustained contact with a client over time. But you decide the cadence of the relationship -- whether you want to check in with a coach weekly, monthly or not at all after a few sessions, Ward said.

You also decide how you want to interact with the coach -- whether by phone, email, video call or on the digital app or online platform the coaching company may provide.

Both Ward and Spann said the information clients share with their financial coaches is confidential and will not be shared with their employers. "You can tell us about your gambling addiction. We would never disclose that," Spann said.

It's a judgment-free experience, Ward added. "There's often fear and shame that if I admit I don't know what I'm doing, I'm going to be judged. We're not going to judge a person."