When advisers become therapists

Financial adviser Rick Kahler was perplexed by a young female client who seemed to have a passion for starting small businesses that went beyond what might be considered merely entrepreneurial.

In one of their early meetings at his Rapid City, S.D., office, he asked many questions about her youth and upbringing as he collected traditional information about her accounts and income sources. Through the process, Mr. Kahler learned that she had watched several of her father’s small businesses fail as a child.

Even though her father ultimately succeeded in one business venture, she developed a deep-seated belief that she would go broke if she didn’t start more businesses.

“I had to interpret that her starting businesses wasn’t out of a passion, it was out of fear,” Mr. Kahler said. “I helped her realize that starting more businesses would likely do the opposite.”

Mr. Kahler and other financial advisers are being trained in financial therapy techniques to help clients such as this woman recognize how past experiences are influencing their money mindset. Advisers also bring therapists trained in money issues into their offices to help clients resolve matters that influence how they spend and save money — much in the way advisers collaborate with estate or tax attorneys.

“If a person is going to be a best-practices financial planner in the future, they are going to have to address financial therapy in some way in their practice,” said Mr. Kahler, who runs

Kahler Financial Group Inc. “There’s a growing realization that emotions play a huge part in financial -decisions.”

Research collaborations between financial experts and therapists over the past decade show that someone who suffers from destructive money and spending patterns likely had an experience or relationship in his or her past that created systemic money issues that can’t be solved with a financial plan or budget.

Money issues can include compulsive buying, couples’ fighting about finances, gambling troubles, hoarding, workaholism, financial avoidance, financial infidelity (hiding spending from a spouse), financially enabling a child or being financially dependent on others.

“Advisers can feel in over their heads when they are dealing with a couple who, for example, start fighting in the office about money,” said James Grubman, a therapist and wealth consultant at FamilyWealth Consulting in Turners Falls, Mass. “Financial therapists often have greater skills for working through partnership and relationship issues.”

TRAINING PROGRAMS

Mr. Grubman works with family offices and large wealth management firms, and consults with advisers seeking new communication skills and coaching tools to help clients work through issues. He and other colleagues in the field created the Financial Therapy Association in 2010 as a center for research.

Brad Klontz, a therapist and certified financial planner, trains advisers and is helping Kansas State University develop a certificate in financial therapy. He teaches advisers coaching strategies for talking to clients about their early experiences involving money, such as what they learned from their parents on the subject, and techniques for helping clients who are resisting change.

“Advisers can borrow from the field of psychology to have the tools and techniques to help clients change destructive financial behaviors,” Mr. Klontz said.

Some clients will be able to change their financial misdeeds after they know why such a problem has existed for them, he said.

However, if a client repeatedly makes the same money mistakes, coaching may not be enough, and a therapist trained in money issues should be consulted.

SIGNING A RELEASE

“If they keep tripping up over the same issue, it’s time for some therapy,” Mr. Klontz said.

Mr. Kahler brings a therapist trained in financial issues into new-client meetings so that both professionals can learn about the client’s history, circumstances and goals right from the beginning. Such a collaborative relationship requires the client to sign a release that allows the therapist and adviser to exchange information about the client.

It isn’t enough for an adviser who suspects deeper emotional money concerns merely to hand the client a business card from a local therapist, experts said.

Most therapists have no training in how to deal with money, so any referrals should be only to those with experience in financial therapy, said Mary Gresham, a psychologist who specializes in money issues.

Additionally, only about 10% of people follow through on such a referral, so advisers are much more likely to help their clients if they bring the therapist into their office, she said.

“Especially for older people, it can be difficult to initiate a new relationship, a new process, even to physically get to a new location,” Ms. Gresham said.

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