Psychology of Financial Planning

Book description

Psychology of Financial Planning: The Practitioner’s Guide to Money and Behavior

In PSYCHOLOGY OF FINANCIAL PLANNING: The Practitioner’s Guide to Money and Behavior, distinguished authors Drs. Brad Klontz, CFP®, Charles Chaffin, and Ted Klontz deliver a comprehensive overview of the psychological factors that impact the financial planning client.

Designed for both professional and academic audiences, PSYCHOLOGY OF FINANCIAL PLANNING is written for those with 30 years in practice as well as those just beginning their journey.

With a focus on how psychology can be applied to real-world financial planning scenarios, PSYCHOLOGY OF FINANCIAL PLANNING provides a much-needed toolbox for practicing financial planners who know that understanding their client’s psychology is critical to their ability to be effective.

The PSYCHOLOGY OF FINANCIAL PLANNING is also a much-needed resource for academic institutions who now need to educate their students in the CFP Board’s newest category of learning objectives: psychology of financial planning.

Topics include:

  • Why we are bad with money
  • Client and planner attitudes, values, & biases
  • Financial flashpoints, money scripts, and financial behaviors
  • Behavioral finance
  • Sources of money conflict
  • Principles of counseling
  • Multicultural competence in financial planning
  • General principles of effective communication
  • Helping clients navigate crisis events
  • Assessment in financial planning
  • Ethical considerations in the psychology of financial planning
  • Getting clients to take action
  • Integrating financial psychology into the financial planning process

PSYCHOLOGY OF FINANCIAL PLANNING goes beyond just theory to show how practitioners can use psychology to better serve their clients. The accompanying workbook provides exercises, scripts, and workshop activities for firms and practitioners who are dedicated to engaging and implementing the content in meaningful ways.

Table of contents

  1. Cover
  2. Title Page
  3. Copyright
  4. Dedication
  5. About the Authors
  6. Introduction
    1. THE IMPERFECT HUMAN
    2. OUR VALUE AS FINANCIAL PLANNERS
    3. HOW TO USE THIS BOOK
  7. PART I: THE PSYCHOLOGY OF MONEY
    1. CHAPTER 1: Financial Instincts: Why We Are Bad With Money
      1. THE SURVIVAL INSTINCTS OF OUR ANCESTORS
      2. SHARING IS CARING … AND SURVIVING?
      3. THE ANTI‐SAVING INSTINCT
      4. I WANT IT NOW!
      5. HERD INSTINCT
      6. WHAT'S YOUR FINANCIAL COMFORT ZONE?
      7. FEAR OF MISSING OUT (FOMO)
      8. SOCIAL STATUS AND RELATIVE DEPRIVATION
      9. TWO SYSTEMS
      10. UNDERSTANDING FINANCIAL INSTINCTS
      11. KEY CONCEPTS
      12. CFP BOARD LEARNING OBJECTIVES COVERED IN THIS CHAPTER
    2. CHAPTER 2: Behavioral Finance: Understanding Cognitive Biases and Heuristics and What to Do About Them
      1. WHAT ARE COGNITIVE BIASES AND HEURISTICS?
      2. THE ROLE OF THE FINANCIAL PLANNER
      3. ELIMINATE THE FRICTION
      4. TECHNIQUES FOR OVERCOMING BIASES
      5. KEY POINTS
      6. CFP BOARD LEARNING OBJECTIVES COVERED IN THIS CHAPTER
    3. CHAPTER 3: The Environment
      1. ENVIRONMENT: CULTURE, GENERATION, CLASS, AND COMMUNITY
      2. WHAT'S NEXT
      3. KEY CONCEPTS
      4. CFP BOARD LEARNING OBJECTIVES COVERED IN THIS CHAPTER
  8. PART II: UNDERSTANDING A CLIENT'S FINANCIAL PSYCHOLOGY
    1. CHAPTER 4: Financial Flashpoints: Exploring a Client's Financial Background
      1. FINANCIAL FLASHPOINTS
      2. KEY POINTS
      3. CFP BOARD LEARNING OBJECTIVES COVERED IN THIS CHAPTER
    2. CHAPTER 5: Money Beliefs
      1. MONEY SCRIPTS
      2. THE ROLE OF THE FINANCIAL PLANNER
      3. KEY POINTS
      4. CFP BOARD LEARNING OBJECTIVES COVERED IN THIS CHAPTER
    3. CHAPTER 6: Financial Behaviors and Outcomes
      1. OVERSPENDING AND UNDERSAVING
      2. FINANCIAL DENIAL
      3. FINANCIAL PARALYSIS
      4. FINANCIAL INFIDELITY
      5. FINANCIAL ENMESHMENT
      6. FINANCIAL ENABLING
      7. FINANCIAL DEPENDENCE
      8. MONEY DISORDERS
      9. THE ROLE OF THE FINANCIAL PLANNER
      10. KEY POINTS
      11. CFP BOARD LEARNING OBJECTIVES COVERED IN THIS CHAPTER
  9. PART III: PRINCIPLES OF COUNSELING, PSYCHOLOGY, AND COMMUNICATION
    1. CHAPTER 7: Sources of Money Conflict
      1. CONFLICT WITH ONESELF
      2. CONFLICT WITH SPOUSE OR PARTNER
      3. CONFLICT WITH FAMILY
      4. CONFLICT WITH OTHERS
      5. KEY POINTS
      6. CFP BOARD LEARNING OBJECTIVES COVERED IN THIS CHAPTER
    2. CHAPTER 8: The Principles of Effective Communication
      1. BEING PRESENT
      2. COMMUNICATION SKILLS TO ESTABLISH RAPPORT
      3. EFFECTIVE COMMUNICATION TECHNIQUES IN PRACTICE
      4. KEY POINTS
      5. CFP BOARD LEARNING OBJECTIVES COVERED IN THIS CHAPTER
    3. CHAPTER 9: Solution‐Focused Techniques in Financial Planning
      1. THE CLIENT HAS THE POWER
      2. FINANCIAL SELF‐EFFICACY
      3. A FOCUS ON SOLUTIONS, NOT PROBLEMS
      4. SOLUTION‐FOCUSED TECHNIQUES FOR THE FINANCIAL PLANNER
      5. LEAD WITH CURIOSITY
      6. KEY POINTS
      7. CFP BOARD LEARNING OBJECTIVES COVERED IN THIS CHAPTER
    4. CHAPTER 10: Cognitive Behavioral Approaches in Financial Planning
      1. THE COGNITIVE MODEL IN PRACTICE
      2. COGNITIVE BEHAVIORAL TECHNIQUES FOR FINANCIAL PLANNERS
      3. KEY POINTS
      4. CFP BOARD LEARNING OBJECTIVES COVERED IN THIS CHAPTER
    5. CHAPTER 11: Positive Psychology in Financial Planning
      1. AN INFUSION OF OPTIMISM
      2. THE THREE LEVELS OF POSITIVE PSYCHOLOGY
      3. THE ROLE OF THE FINANCIAL PLANNER
      4. KEY POINTS
      5. CFP BOARD LEARNING OBJECTIVES COVERED IN THIS CHAPTER
    6. CHAPTER 12: Working with Couples and Families: A Systems Perspective
      1. THE SELF‐AWARE FINANCIAL PLANNER
      2. MAINTAINING NEUTRALITY
      3. TRANSFERENCE VERSUS COUNTERTRANSFERENCE
      4. COUPLE CONFLICT
      5. FINANCIAL INFIDELITY
      6. FINANCIAL ABUSE
      7. STRATEGIES FOR HELPING COUPLES RESOLVE FINANCIAL CONFLICTS
      8. TOOLS FOR RESOLVING CONFLICT IN COUPLES AND FAMILIES
      9. SEPARATE OR COMBINED FINANCES
      10. SCENARIO PLANNING
      11. MONITORING
      12. KEY POINTS
      13. CFP BOARD LEARNING OBJECTIVES COVERED IN THIS CHAPTER
  10. PART IV: CLIENT AND PLANNER ATTITUDES, VALUES, AND BIASES
    1. CHAPTER 13: Multicultural Competence in Financial Planning: Understanding Your Client's Cultural Identity
      1. THE MULTICULTURALLY COMPETENT FINANCIAL PLANNER
      2. SELF‐AWARENESS AROUND MAJORITY AND MINORITY STATUS
      3. RECOGNIZING MAJORITY GROUP PRIVILEGE AND MINORITY GROUP DISADVANTAGE
      4. CULTURAL HUMILITY
      5. TEN AREAS OF CULTURE AND MAJORITY/MINORITY STATUS THAT IMPACT FINANCIAL PLANNING
      6. KEY POINTS
      7. CFP BOARD LEARNING OBJECTIVES COVERED IN THIS CHAPTER
    2. CHAPTER 14: Financial Risk Tolerance
      1. RISK TOLERANCE
      2. EMOTIONS, FOMO, AND RISK TOLERANCE
      3. DEVELOPMENT, HISTORY, AND FAMILY
      4. LOSS AVERSION
      5. ASSESSING A CLIENT'S RISK TOLERANCE
      6. KEY POINTS
      7. CFP BOARD LEARNING OBJECTIVES COVERED IN THIS CHAPTER
    3. CHAPTER 15: Client‐Preferred Learning Styles: Getting and Keeping Your Client's Attention
      1. WHAT IS A PREFERRED LEARNING STYLE?
      2. A MULTIFACETED APPROACH
      3. TALK LESS; LISTEN MORE
      4. KEY POINTS
      5. CFP BOARD LEARNING OBJECTIVES COVERED IN THIS CHAPTER
    4. CHAPTER 16: Client Values and Goals
      1. MASLOW'S HIERARCHY OF NEEDS
      2. THREE UNIVERSAL HUMAN NEEDS: SELF‐DETERMINATION THEORY
      3. MAKING SENSE OF CLIENT NEEDS IN FINANCIAL PLANNING
      4. HUMAN NEEDS AND SELF‐DESTRUCTIVE FINANCIAL BEHAVIORS
      5. RESPONDING WITHOUT JUDGMENT
      6. DOES YOUR CLIENT BELIEVE THAT THEY HAVE THE ABILITY TO REACH THEIR GOALS?
      7. FINANCIAL SELF‐EFFICACY
      8. THE ADVISOR AND CLIENT FINANCIAL SELF‐EFFICACY
      9. NINE THINGS EVERY FINANCIAL PLANNER SHOULD KNOW ABOUT GOALS
      10. KEY POINTS
      11. CFP BOARD LEARNING OBJECTIVES COVERED IN THIS CHAPTER
  11. PART V: INTEGRATING FINANCIAL PSYCHOLOGY INTO FINANCIAL PLANNING
    1. CHAPTER 17: Getting the Client to Take Action: Motivational Interviewing in Financial Planning
      1. THE CHANGE PROCESS
      2. ENCOUNTERING RESISTANCE TO CHANGE
      3. CONVERSATIONAL PITFALLS TO AVOID WITH CLIENTS WHO ARE NOT READY TO CHANGE
      4. NINE EVIDENCE‐BASED TECHNIQUES FOR OVERCOMING CLIENT RESISTANCE TO FINANCIAL ADVICE
      5. TAKING “NO” FOR AN ANSWER
      6. KEY POINTS
      7. CFP BOARD LEARNING OBJECTIVES COVERED IN THIS CHAPTER
    2. CHAPTER 18: Helping a Client in Crisis
      1. CRISIS EVENTS WITH SEVERE CONSEQUENCES
      2. THE IMPORTANCE OF THE CLIENT–PLANNER RELATIONSHIP
      3. THE FINANCIAL PLANNER'S ROLE IN HELPING A CLIENT NAVIGATE CRISIS
      4. SIX STEPS FOR A FINANCIAL PLANNING CRISIS EVENT
      5. BEFORE A CRISIS
      6. AFTER A CRISIS
      7. KEY POINTS
      8. CFP BOARD LEARNING OBJECTIVES COVERED IN THIS CHAPTER
    3. CHAPTER 19: Assessment in Financial Planning
      1. OBSERVATIONS
      2. INTERVIEWS
      3. KEY POINTS
      4. CFP BOARD LEARNING OBJECTIVES COVERED IN THIS CHAPTER
    4. CHAPTER 20: The Role of the Financial Planner: Ethical Considerations in the Psychology of Financial Planning
      1. A FINANCIAL PLANNER IS NOT A MENTAL HEALTH PROVIDER
      2. WHEN AND HOW TO REFER
      3. ETHICAL CONSIDERATIONS
      4. THE NEW FINANCIAL PLANNER
      5. KEY POINTS
  12. References
  13. Index
  14. End User License Agreement

Product information

  • Title: Psychology of Financial Planning
  • Author(s): Charles R. Chaffin, Ted Klontz, Brad Klontz
  • Release date: September 2022
  • Publisher(s): Wiley
  • ISBN: 9781119983729