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Utah Business

Though touted as a billion dollar industry, many life coaches aren’t qualified, don’t turn a profit, and are taking advantage of their customers.

Unqualified

Like many of the coaching industry’s early adopters, Kim Giles’ first exposure to coaching came via a corporate job, where she was responsible for sales training. As she tried to boost her team’s performance, she says, it quickly became apparent that most employees’ problems stemmed from issues of personal development. “They were insecure, they didn’t really feel comfortable,” Ms. Giles says. “So I started developing a program to help people get past their fears.”

Ms. Giles was far from an overnight success. About nine years ago, she began writing a weekly advice column for KSL after appearing in a Good Morning America contest for all kinds of “advice gurus.” Her column is now syndicated by multiple publications, and Ms. Giles spends most of her time running Clarity Point Coaching, a school for other would-be professional advice-givers.

She earned her first coaching certification in the early 2000s but said she found that most existing coaching programs weren’t effective. So she began conducting research and experimenting with her own techniques. “It took me seven years before I had what I felt was tested enough that I could train other people,” Ms. Giles says

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There’s no doubt in Ms. Giles’ mind that coaching has grown in popularity over recent years, particularly in Utah. “Almost all of us would like to do something that makes a difference in the lives of other people, and would like to be helpers.” There’s just one problem, she says: “[The industry] is so flooded right now, but it’s not necessarily flooded with people who are trained to do it. It’s just people who have jumped in because they can.”

Unprofitable

According to Ms. Giles, emerging coaches today are entering a very different marketplace. When she started, most of her prospective customers had never heard of life coaching. Today, the notion is far more common—and there are far, far more coaches.

That isn’t to suggest that demand has not increased—Ms. Giles believes it has. The increased prevalence of anxiety and depression in society has many individuals looking to safeguard or improve their mental health. Coaching, Ms. Giles says, is an early but emerging industry in a similar stage as was the fitness industry in the 60s and 70s.

“As human beings, now that our basic needs are met, we’re trying to improve at a higher level,” Ms. Giles says. “We’re trying to show up as a better human being, [with] more balance, [and] better with people. It’s a natural progression.”

The growth of coaching as a profession is a national trend—nearly every state is currently experiencing a surplus of coaches compared to a demand for their services, according to Stephan Wiedner, CEO of Noomii, an international directory of coaching professionals. In truth, he says, only a handful of the people who enter the profession stick with it. Aspiring coaches initially “go out into the world and see their niece struggling in her career, and their cousin who can’t get his business organized, and so-and-so with mild depression. They’re looking at the world and they see a sea of opportunity.”

Then they hang up their shingle, Mr. Wiedner says, and nobody comes. “A lot of people say coaching is a billion-dollar industry,” he says, “and the fact of the matter is that the people making the most consistent money are the people selling coach training.”

Selling Snake Oil

“I know these places look for people with financial difficulties because that’s how they’re going to solve the problem,” says Pam Bennett, once an aspiring business coach who now runs a Facebook page where individuals can report life coaching fraud. “This is all over [the country], but I do think it’s a big issue here. You have a lot of stay-at-home moms who want extra income, so you get these ideas, go to these conventions, and it’s a big hyped up thing—’use our program, and we’ll get you your million dollars.’” All for the nominal price of $30,000—but don’t worry, Ms. Bennett says, they promise you’ll make it back.

Originally, Ms. Bennett wanted to start a business in which she helped established business owners navigate the age of the internet by teaching them how to use basic digital tools such as Hootsuite and MailChimp. As is often the case, business was off to a slow start when an acquaintance told her the “holy ghost” had come to her during prayer and prompted her to give Ms. Bennett tickets to an event featuring a prominent business coach in California.

Looking back, Ms. Bennett says, this should have been an immediate red flag. Claims of religious inspiration are a common element in the stories she’s collected from others on her Facebook page, Stop Mentor/Coach Fraud, which she founded in 2016.

Attending the event, which involved a road trip to California with friends, was an enjoyable experience, she says. Ms. Bennett was invited to pitch her business and was told she had a “golden idea” and that a coaching program could help build her success. Over time, she was also invited to work as a member of the team hosting these events.

Only then did she begin to notice patterns—aspiring coaches and entrepreneurs, all with “golden ideas,” were offered loans of tens of thousands of dollars to cover coaching packages that were never entirely delivered. Ms. Bennett continued to push for the website, photoshoot, and book her package was supposed to include. But the photoshoot went poorly, and the book never evolved beyond the content she provided. Her coach instructed her to fabricate credentials for the website.

“These get rich quick schemes,” are a problem within the industry, Mr. Wiedner agrees—and they often target coaches. Noomi regularly sends alerts to its members about individuals or organizations that are “browsing our list and preying on our coaches, trying to get them into various scams.”

Indeed, according to the Federal Trade Commission, coaching scams operating in Utah have fleeced would-be customers out of more than $334 million in recent years. While some of these schemes are multi-state ventures, many originated in Utah—including Vision Solution Marketing, which was closed by the FTC in 2018 after complaints alleging $8.5 million in damages; Thrive Learning, which settled with the FTC in 2017 after $27 million in alleged damages; and Apply Knowledge, which settled after complaints totaled $28 million.

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Victims of these schemes reported experiences similar to Ms. Bennett’s. Customers purchased coaching packages—often putting thousands or even tens of thousands in charges on their credit cards—on the belief that the coaching business would assist them in building a profitable business. Subsequent investigations found that few, if any, customers actually made money; in many cases, the company’s coaches were woefully underqualified or even, according to the FTC, nonexistent.

After a rash of such schemes, the FTC issued a warning pointing out, among other things, that individuals interested in starting a business can often acquire free or low-cost advisement from organizations such as the Small Business Administration.

Unqualified

Having become—accidently—part of one such scheme, Ms. Bennett believes there are some who enter the coaching industry with the intent to defraud customers. But she’s not convinced that every coaching-related complaint starts this way. In many cases, she says, it’s possible that the coach never intended to do harm.

“I would guess that many of them, they start charging all this money, but don’t realize there are things they need to be a business—a defined program, set hours,” and so on, Ms. Bennett says. “Either the program is not ready, or they don’t realize that they actually have to coach people, and it starts to snowball into this big mess.”

This, Ms. Bennett and others agree, points to the root of the industry’s woes: “There is no regulation,” she says. “You can wake up tomorrow and say I am an expert relationship coach or financial coach. And this is what they teach at the conferences—that you can be an expert in anything, and then people go and pay tens of thousands of dollars to people who have actually only read a book and maybe gone to a conference.”

This kind of mentality, Mr. Wiedner says, may create a disconnect between the coach and the client. The coach may believe their services are far more effective than they actually are, leading to inflated or outright false marketing claims. The client, meanwhile, may feel they’ve been scammed.

This is not to say there aren’t legitimate coaches, Ms. Bennett says. But the difficulty in distinguishing between legitimate practitioners and fraudsters is a source of significant pain within the industry. For her part, Ms. Giles says she strives to keep problems at bay by enrolling her clients in a set, three-month self-improvement curriculum. At the end, she uses worksheets and surveys to continuously evaluate the efficacy of her program.

Ms. Giles also strongly recommends that would-be clients look for formal credentials of a coach. Her own program is popular in Utah, but there are several international groups attempting to standardize coaching certification. Several universities, including the University of Utah, have begun offering coaching certificates. Personally, Mr. Wiedner recommends the International Coach Federation, which has stringent requirements for both individual certifications, and for credentialing coaching schools.

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But coaching schools suffer from some of the same problems as the coaches themselves: anyone can purport to offer coach training. So certification may imply years of training, Mr. Wiedner says, or it may mean “they went eight hours one day to get trained.”

Formal regulation may seem like the answer, Mr. Wiedner says, but in practice, that too could prove challenging, if only due to the difficulty of defining what coaching actually is. In Ms. Giles’ view, the purpose of coaching is giving clients the tools they need for continuous self-improvement, unlike psychotherapy, which is designed to address diagnosed psychiatric conditions.

“Therapy is to get you from dysfunctional to functional,” Ms. Giles says. “Coaching should help the [functional achieve] mastery in their lives. I want clients to get therapy to deal with past trauma or addiction. But if they just want to improve self-esteem and relationship skills, that is when they come to coaching.”

Mr. Wiender thinks the lines are blurrier, with many contemporary coaches offering everything from meditation and low-level psychotherapeutic services alongside career advice, religious guidance, and even health and fitness training. Coaching is still a young industry, he says. Just as medicine and law gradually became regulated industries with formalized educational paths, complaints of fraud and unqualified practitioners could one day lead coaching to the same outcome.

But for Ms. Bennett, the coaching industry’s internal dialog about personal improvement is too little, too late. She has since abandoned all aspirations of becoming a coach. Instead, she says, she is pursuing training as a paralegal so she can help others with contracts and fraud.

Emma Penrod is a journalist based in rural Utah who covers science, technology, business and environmental health. She writes a weekly water politics newsletter at pactio.us/host/emma-penrod and Tweets about the latest science and industry news @EmaPen. When she's not writing, reading or researching, she's hunting sagebrush-scented air fresheners.

Comments (1)

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    Mormon Mike

    Great article Emma

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