Financial Therapy: On the couch with your planner!

“Seek First to Understand; then to be understood.”—St. Francis of Assisi
Before viral woes struck, CNBC (8/16/19) reported that the “average American has $38,000 in debt — a quarter of which comes directly from credit card charges. In December 2018, consumer debt overall hit a record high $4 trillion.”  Wikipedia ranks the US as 100^th in savings rates in the world at 16.9% of GDP (2016), well behind China, Japan, Panama and the Congo.  As a Certified Financial Planner with degrees in history and Political Economy from UC Berkeley, I raise long-term concerns not only about American competitiveness going forward, but even fear national disaster as the population ages and pensions and Social Security become less trustworthy.   Causes for this include unrealistic expectations that government or corporations will handle retirement, the breakdown of the traditional family and decreasing personal responsibility encouraged by “not your fault” education.  Corporate advertising creates “societal money scripts” encouraging spending while government de-stigmatizes welfare dependency.  As a recent graduate of Golden Gate University’s Master’s Program in Advanced Financial Planning, I found answers to social problems from psychology classes teaching “Financial Therapy” to help everyone find meaning from money.  Planning is now a subjective science which balances the genuine need for money as a tool of support for life with eye-popping flexibility of lifestyles.
America’s workaholic “money scripts” were the source of our wealth but also the cause of dissatisfaction inbroken families and narrowed perspectives.  In the 1840’s, Alexis De Toqueville observed that our sailors would not dawdle in ports like the British, but would set sail into a storm for China then reload within two days for the return voyage.  Surely life planners have a role helping workaholics or compulsive spenders, for instance, find meaning from money as financial planners and therapists show pathological gambler or spenders, long-term dependents and enabling relatives, or Scrooge-like misers the numerical means and psychological path to financial health.  These “money disorders”, according to Brad Klontz, author of “Mind Over Money” and co-founder of the Financial Psychology Institute, are “maladaptive patterns of financial beliefs and behaviors…”
In the heat of divorce, I became my own best-case study of money scripts and disorders played out in later life.  My parent’s “money secrecy” and spending hypocrisy had led me to “money dependence” in graduate history schools, “financial denial” of student loans, and a desire to rebel against their stated financial conservatism.  As the spoiled first son of a strictly nuclear family with a generous and successful father, I was a “money avoider” who dreaded saving.  Fearing feared financial disaster, I grasped the wonders of financial independence from a random lecture on the “Rule of 72”; I then sacrificed my chances to write and teach as a “money worshiper” for the past eight years as I gained humble financial independence with ETF’s and leveraged real estate.  I could invest, yes, but I couldn’t save.  I now aspire to both “freedom” and “money vigilance” which Klontz describes as: “themes of frugality, the importance of saving…and nervousness about making sure money is saved in case of an emergency.”
  To heal disorders, CFP’s must go into sometimes painful elements of a client’s past with tools like questionnaires to detect “money scripts”, drawings illustrating life relationships, incompletion exercises where quick verbiage reveals “Freudian slips”, writing stories and telling tales metaphorically, charting relationships and even meditation.  The planner is no therapist and may call in therapists for serious conditions, but planners may well master empathy in conversations:  the ability to actively listen for and understand another person’s perspective and feelings in stressful situations.  If clients with means say that they just can’t save, the planner may respond: “It must be frustrating to know you want to save for a decent retirement, but not know how you can save?”  The planner as therapist may paraphrase content, reflect emotions implied in conversation, ask relevant questions, help clients focus on levels of anxiety or elation, share observations and reveal hopefulness.
Clearly these therapeutic skills go beyond the traditional planner’s exterior knowledge of stock options, 401k rules, annuitization tables, estate plans set to the inevitable colored charts and graphs—but planners need interior finance.  Like good doctors, they “facilitate” financial health so “financial coaching” may then lead clients from therapy to objective decisions they can live by.  Planners empathetically listen to see how a person’s social, cultural or religious background shapes their views as we seek money memories which affect the clients’ current attitudes about savings, risk, etc. With culture and psychology preceding economics, we ask if money brings clients freedom, power guilt, social connection, security etc.?  We face our fears like Scrooge did when he met Marley, open our present to possibilities and envision a far brighter human future–as Scrooge ultimately did.  On a secular level, planning is the “science of happiness”.