Psychology of Financial Planning

CHAPTER 20The Role of the Financial Planner: Ethical Considerations in the Psychology of Financial Planning

Money is one of the top stressors in the lives of Americans, and chronic stress can have devastating impacts on a person's mental health, relationships, and physical health [172]. But the question is this: If someone is experiencing financial stress, who do they see to help them? Unfortunately, it is not a mental health professional. Studies have shown, for example, that mental health providers tend to be more money avoidant and have even lower levels of financial health than many other professions [59]. This is where financial planners come in. Financial planners are in a unique position to help clients deal with the biggest source of stress in their lives, and as such, often play a therapeutic role in their clients' lives. In many ways, financial planners are akin to that of other “healers” in our culture, such as mental health and medical professionals [173]. The role of the financial planner is to first understand their client, which encompasses all the instinct, biases, and behaviors that impact their financial well‐being. Second, we then use the tools at our disposal to help clients improve their financial lives, meet their goals, and reduce their stress.

A FINANCIAL PLANNER IS NOT A MENTAL HEALTH PROVIDER

While meeting with financial planners can be therapeutic, they are not mental health therapists. Integrating psychology into financial planning can be confusing ...