Financial therapy is a multidisciplinary approach that combines financial planning with emotional support to address and improve an individual’s, couple’s, or family’s relationship with money.
Certified Financial Therapists are a new class of financial advisor and therapist, born out of the 2008 Global Financial Crisis. Certified Financial Therapists are certified by the Financial Therapy Association and are professionals who are trained both in financial planning and counseling techniques.
A financial therapists can add value to their clients by helping them identify their financial goals, understand their money habits, and manage financial stressors effectively.
The practice of financial therapy aims to provide a well-rounded approach to financial management, addressing both the quantitative aspects of finance as well as the qualitative aspects, such as emotional and relational issues tied to money.
Financial advisors used to never address the psychology of money and psychologists and therapists used to be useless at discussing financial and money topics, other than at a very surface level.
Financial therapy combines the techniques of inquiry from psychology, counseling, and therapy with the practical knowledge of financial advising.
How Financial Therapists Can Help High Income and High Net Worth Individuals, Couples, and Families
For high-income and high-net-worth individuals, couples, and families, financial therapy can be an invaluable tool for navigating the unique complexities that come with substantial wealth.
Navigate Complex Financial Landscapes
High-net-worth individuals often have a diverse portfolio of investments, assets, and liabilities. Financial therapy can help them navigate this complexity, making sure that their financial strategies align with their values and goals, and not merely numbers on a balance sheet.
Managing Financial Stress and Anxiety
By employing financial therapy, high-income and high-net-worth individuals, couples, and families can navigate the unique challenges and opportunities that wealth brings, fostering healthier relationships with money and finding greater satisfaction and fulfillment in their financial lives.
Philanthropy and Legacy Planning
Philanthropy and legacy planning are often high on the agenda for high-net-worth individuals. Financial therapy facilitates the alignment of their philanthropic activities with their core values, helping them derive more fulfillment from their giving, and assisting in the creation of legacies that resonate with their deepest principles and aspirations.
Family Dynamics and Wealth Transition
Significant wealth can sometimes introduce complexities in family dynamics, particularly when it comes to topics like inheritance and wealth transition planning.
Financial therapy serves as a conduit for healthy communication and understanding among family members, fostering smoother transitions and reducing potential conflicts arising from financial discussions.
Financial therapists can help wealth families avoid some of the traps of generational wealth.
Behavioral Aspects of Wealth Management
High-net-worth individuals sometimes encounter challenges concerning spending, saving, and investment behaviors. Financial therapy assists in dissecting the behavioral aspects intertwined with wealth management, developing comprehensive strategies that encourage more effective and conscious management of their significant assets.
For couples with substantial assets, financial matters can sometimes become a source of conflict in their relationship.
Financial therapy proves to be a useful tool in these scenarios, helping couples navigate financial disputes with harmony and understanding, thereby fostering a healthier, more symbiotic relationship concerning financial matters.
Fulfillment and Purpose
Individuals with significant wealth may sometimes find themselves grappling with issues of fulfillment and purpose, especially as financial security may remove some of the traditional motivators that encourage individuals to pursue careers or personal development.
Through financial therapy, they can explore new pathways to fulfillment, adeptly aligning their financial prowess with personal and familial goals and aspirations, fostering a richer, more purposeful life.
Financial Therapy Is Not the SOlution To Your Problems
While financial therapy can provide encouragement, direction, and support, it will not solve of your problems overnight.
A financial therapist is more like a trusted advisor or professional, not a problem solver, who can ask the right questions and get you to think through your situation.
Good financial therapists will always let you know that they probably don’t have the solutions to your problems. The good news, though, is YOU probably have the solutions to your problems!
A financial therapist can help ask the questions that may lead you to reframe your situation in a way that helps you more clearly see the path ahead.