PRACTICE MANAGEMENT
6 Signs You Need a Financial Therapist
By Rick Kahler, MS, CFP®, CFT-I™, CeFT®
Early in my financial planning career, it was common for advisors to describe clients who repeatedly failed to follow advice as “noncompliant.” All too often, the only way advisors knew how to deal with these clients was to fire them.
Several decades later, the profession has a more effective option: referring such clients to a financial therapist. Financial therapists, with training in both therapeutic methodologies and financial planning, have the tools to bridge the space between the two professions. Their skills can be crucial to help clients modify financial behaviors that are blocking their path toward financial wellness.
How do you know when it’s time to make that referral? Here are six things to look for.
1. When a client is “stuck.”
These are often the clients who are chronically unable to follow through and take action, even on financial recommendations they know to be in their best interest. More financial knowledge or information does not help them change. “White-knuckled” attempts to force themselves into wiser behavior do not last. Negative financial or relationship consequences of their inaction do not result in lasting change. They agree they “should” take steps, and in meetings with you they may be apologetic and rueful. They may appear depressed or resigned to being stuck. They are likely to see it as a permanent condition rather than something that can be changed.
2. When a client couple is unable to resolve money-related conflicts.
This may be a serious one-time issue, such as partners being unable to agree on crucial estate planning decisions. It also may be a chronic conflict over spending, saving, or other financial choices. Money conflicts, especially when they include power struggles and financial infidelity, can destroy a coupleship. Resolving these deep conflicts often requires therapeutic intervention rather than financial solutions.
3. When clients persist with financial behaviors that appear to make no logical sense—even to themselves.
One example of this would be underspending to a point of neglecting health needs or not providing basic comforts they could easily afford. Other common behaviors include compulsive shopping, addictive gambling or risk-taking, financial enabling, secret spending, and overspending. Even when clients acknowledge their behaviors do not serve them well, they seem unable to change.
Any such behavior that continues even though it clearly harms clients’ financial well-being is likely to be rooted in trauma. Helping clients explore and heal the issues, pain, and beliefs that underlie the behavior is best done with the help of a financial therapist.
4. When clients appear to feel chronic anxiety or worry over money.
For some clients, this may stem from stress around circumstances or life transitions such as a business failure, a divorce, or a death in the family. For others, it may be a broader sense of unease or anxiety that is not tied to any specific circumstances but persists even when they are financially secure with no apparent reasons to worry about money.
5. When clients have extreme difficulty talking about money.
It’s part of our role as financial advisors to help clients who find it intimidating or uncomfortable to discuss finances. Yet for some clients, this difficulty goes far beyond discomfort. They may feel anxiety, panic, or extreme fear of conflict or rejection at the idea of money conversations, not just with an advisor but with spouses, family members, or employers. They may take extreme measures to avoid or abruptly end such conversations even when the avoidance results in harm to their finances or their relationships.
6. When clients appear chronically apathetic, depressed, or hopeless.
They seem to lack financial direction, feeling powerless or ambivalent. They are uncertain, not only about achieving financial goals, but also about having financial goals in the first place.
When you see a need to refer a client to a financial therapist, the next question is where to find one. I caution you not to assume anyone presenting themselves as doing financial therapy is well trained or credentialed. The term financial therapist is not regulated. I recommend starting with the Financial Therapy Association (FTA) and looking for a qualified professional who is either a Certified Financial Therapist - Level 1 or has formal training in both mental health and personal financial planning.
Referring a client to a financial therapist is an additional tool for serving that client’s best interests. It does not mean you have failed the client or the planner/client relationship is not working. It is a way to strengthen that relationship and support clients in building financial and emotional well-being.
Rick Kahler, MS, CFP®, CFT-I™, CeFT® is founder of Kahler Financial Group and a pioneer in integrating financial planning and psychology. Rick is one of the founders of financial therapy and recognized internationally for his pioneering work in that field.
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