Thanks to funding from the FINRA Foundation and a partnership with Step Up Savannah, from December 2014 through April 2016 CCCS conducted a financial coaching pilot for its Debt Management Plan (DMP) clients. CCCS delivered “virtual” coaching by sending monthly emails and letters to clients. These emails and letters encourage them, provide accountability, and deliver financial tips. Also, they link them to resources and let them know who to contact if they have questions/concerns. CCCS sent clients a sheet to track expenses, tips on saving money, and a SMART goal worksheet. Additionally, they received ways to better manage their CCCS account.
The CCCS hypothesized that providing financial coaching would improve client success in paying off debt and increase the percentage of clients staying on the plan for six months and one year.
During the one year pilot, 93% of clients stayed on the plan for six months and 76% remained on the plan after one year. Without coaching, there was only an 83% retention for the first six-month plan. Also, there was only a 62% retention for the one year plan without counseling. This increase in retention proved that financial coaching works. The CCCS has chosen to continue using this model for its DMP clients.
On average, clients began their plan with $12,747 in debt and reduced it by 12% within the first six months and 26% after one year. The average DMP client started their plan with a credit score of 560. After six months of debt reduction and financial coaching, the average credit score is 567. Overall, this finding is significant because many clients do not join the plan because they are afraid that their score will decrease.
In fact, in a follow-up survey, 72% of clients found the coaching helpful. Also, 58% achieved a financial goal during the time. Clients stated they liked the “guidance with a budget, reasonable payments, and encouragement” and it was an “easy program, only have to focus on living on a budget. Haven’t had any creditors call or contact me.”