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Financial Advisors: When to Use Internal and External Coaching

By ClientWise | October 29, 2013


As coaching has become more recognized as a practice management and career fulfillment tool for financial advisors, the use of internal coaches seems to be a growing trend.
In a recent survey by Ridler & Co., 79 percent of organizations expect to see an increase in the use of internal coaching over the next three years. [Note: this was a European-focused survey that included many diverse organizations and industries.]

 

For many successful financial advisors who work within firms that embrace coaching and have built coaching structures, internal coaches (Note: an internal coach is a coach employed by the coachee’s organization) are a viable choice. At the same time, external coaches offer multiple benefits in contrast to internal coaches, depending upon the circumstances of course.

 

Thus, it might be helpful to sketch out some of the generally accepted perceptions as to why a financial advisor might use internal, and external, coaches:

 

Internal Coaches: Benefits

  • More cost-efficient and a better value.
  • Possess a depth of understanding of an organization’s business context and political environment.
  • Internal coaches are more easily accessible.

 

External Coaches: Benefits

  • Not part of an organizational hierarchy. Objective and independent.
  • Bring fresh and broad perspectives drawn from coaching across a variety of organizations.
  • More inclined to challenge the entrenched "organizational" assumptions held by the coachee.
  • Higher levels of expertise, training, and experience.
  • Can avoid complex “boundary management issues”, e.g. working closely with colleagues, etc.
  • In a situation where the coachee is actively considering leaving the firm, he or she can be fully open and transparent with the coach.
  • There is little to no prior personal knowledge that the coach has of the coachee, thus averting any preconceptions before the start of a coaching assignment.

 

There is no “universally correct” choice for financial advisors who are choosing between an internal and external coach. And there are situations where the use of BOTH an internal and external coach is warranted. For example, a financial advisory team who has recently transitioned to a new firm and might want the organizational knowledge of an internal coach, as well as the broad, industry perspective of an external coach.

 

One of the principal reasons reported for the increase in internal coaching is that internal coaches understand the organization better than external coaches. This can be a double-edged sword, however. A corresponding challenge for internal coaches is that they are so embedded in their organization’s culture that it is difficult for them to guide the coachee towards a fully objective perspective.

 

There are many other perspectives on internal vs. external coaching. We offer the following ClientWise Learning Tool to encourage additional thinking:

 

Coaching Decision Kit

Topics: Coaching

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