Category Archives: Financial Therapy

Financial Therapy: Addressing Practice Concerns

Financial Therapy: Addressing Practice Concerns[1]

John Grable, Ph.D., CFP®

As I write this, the Financial Therapy Association is in the process of launching a certification in financial therapy. This momentous event is causing some financial therapy stakeholders concern. There are a few mental health professionals who have expressed alarm that a non-mental health licensed professional—including financial planners, financial counselors, and some financial therapists—will use this certification as blanket approval to begin diagnosing clients and providing advice that is outside the scope of their practice. Some financial planners/counselors are equally concerned that unregulated mental health professionals will begin providing investment advice. On top of these issues is the notion of “dual relationships,” which under Financial Therapy Association rules would prohibit a financial therapist from meeting with clients in most social situations.

When viewed individually, some of the concerns raised about certification seem insurmountable. The purpose of this brief overview of financial therapy is to provide context for worries and to provide a clear visualization of financial therapy’s unique niche in the professional landscape. To begin, let’s look at a client case.

Here is the scenario. You just finished meeting with a prospective client. The person came to you based on your reputation—a current client referred the person to you. After meeting with the prospective client, you walk with him to his car. You immediately notice that the car is rather old, unwashed, and filled with what someone might rightly call ‘trash.’ When the prospective client opens the door to the car you notice that there are, literally, hundreds of shopping bags full of what appear to be unopened purchases from large retailers in the area. This catches you off guard a bit but don’t think much about it until you meet the person again the following week.

During the meeting the person, who has now engaged your services as a client, indicates that he is anxious about his financial situation. He has been spending money on things without really using the purchased products. Upon further conversation, it becomes clear that the client is angry, upset at this inability to manage his financial situation, and quite anxious. Given this information, what would you do?

The answer to this question will be based on the dominant professional field in which the professional practices. Because there are so few financial therapists, answers tend to be weighted either heavily in financial planning/counseling or mental health. Consider state of the financial therapy profession today. On one side are financial therapists whose training and background have followed a traditional financial planning or counseling path. On the other side are financial therapists who have taken on financial issues from a mental health perspective. In the middle are financial therapists in the pure sense of the term—they have been trained in the functional elements of both personal finance and mental health. Let’s see how each might address the client’s issue.

Financial Planner/Counselor

A financial planner/counselor would almost immediately delve into the client’s financial situation. The unwrapped bags in the client’s car would hint at a spending problem, which would lead to creating a cash flow statement to determine the client’s income and expense situation. A net worth statement would also be developed as a tool to help determine the financial capacity of the client to withstand financial shocks. Data from these tools would be used to obtain a “financial snapshot” of the client’s situation using financial ratios. Concurrently, the financial planner/counselor would be assessing the client’s attitudes, beliefs, and behaviors. Information obtained from a standard data gathering form, which might include measures of risk tolerance, expectations, and financial satisfaction, would be evaluated in the context of the client’s financial objectives and goals. A well-trained financial planner/counselor would then process the information at hand using the six-step financial planning process in the development and implementation of recommendations designed to help the client balance his financial situation (i.e., ensure that income exceeds expenses).

Mental Health Professional

A competent and well-trained mental health professional would look at the same situation and immediately begin implementing assessment and diagnosis tasks. The unopened bags in the client’s car would hint at an underlying psychological condition, which would lead a mental health profession to begin administering diagnostic assessments related to compulsive disorders, compulsive shopping, addiction, depression, and other clinical scales. Results from these tests would then be used to match the client’s stated goals with (a) the results of the diagnostic tests and (b) the treatment preference(s) of the mental health professional. In nearly all cases, the mental health professional will engage in therapeutic interventions to help the client uncover the issues that may be prompting him to spend more than he earns. The therapeutic model developed by the mental health professional will be designed to provide the client with strengths to deal with current and future stressors.

Financial Therapist

A financial therapist would look at this case and the manner in which the financial planner/counselor and mental health professional dealt with the situation with puzzlement. While both professionals should be commended for jumping into the case with the intent of helping the client solve his problems, both dealt with the situation with non-integrative techniques. They used the unopened bags as a clue to guide their intervention preferences. The financial planner/counselor attempted to provide a solution to the question by providing recommendations that were designed to fix the situation. This approach excluded, to a great extent, any attempt to understand the psychological or behavioral motivations of the client. The mental health professional, on the other hand, dealt with the situation almost entirely by focusing on the mental aspects of the client’s situation. No attention was paid to how the client should deal with day-to-day allocations of income and expenses.

Although this summary implies a criticism of these two approaches, these professionals are actually to be congratulated because many of their colleagues would choose not to work with this client. Many financial planners/counselors might find the client’s situation too daunting and unprofitable. Some mental health professionals, likewise, might find that their diagnoses are not billable under traditional insurance programs, and as such, refer the client to someone else. Others may simply assume that the financial problems faced by the client are nothing more than a symptom of a deeper emotional problem, and thus completely avoid dealing with the client’s financial situation.

This is where a financial therapist, as envisioned by the Financial Therapy Association, fits into the picture. A financial therapist—even one who is just beginning his or her professional career, would likely combine aspects of what the financial planner/counselor and mental health professional did. That is, the financial therapist would evaluate the client’s current financial situation and assess the client’s attitudes, beliefs, and behaviors. The information obtained from the “financial” side of the evaluation would be merged with the “therapy” side of the case to arrive at a series of “treatments.” The key takeaway is that both tasks are needed and used by a financial therapist.

Financial therapy treatments will generally be comprised of very applied financial solutions and/or interventions designed to stabilize and improve a client’s financial situation, while at the same time the financial therapist would employ evidence-based treatments to help his or her client find the strength, courage, and resources needed to deal with the emotional aspects of managing his or her household’s financial situation on a day-to-day basis.

And it is here the biggest obstacles to financial therapy exists. Two concepts cloud how financial therapy can work in practice. The first opaque issue is related to assessment. The second is associated with the concept of therapy.

Only a licensed mental health professional or medical physician can engage in a diagnostic assessment. According to the Minnesota Department of Human Services, whose rules mirror that of nearly every other state regulator, a diagnostic assessment is a written report that documents the clinical and functional face-to-face evaluation of a recipient’s mental health. A diagnosis must include a summary of the nature, severity, and impact of behavioral difficulties; the client’s functional impairment; an evaluation of subjective distress; and a review of client strengths and resources. In general, a diagnostic assessment is necessary to determine whether a client will be eligible for mental health services.

It is important to be clear on this point! The diagnosis of an issue or impairment can only be made by a licensed professional; however, any professional may use assessments when working with clients for the purpose of information gathering and referral.

Let’s revisit the earlier case. It is permissible for a financial therapist (or a financial planner/counselor) to ask questions related to a client’s attitudes, beliefs, feelings, and emotions as an element of the data gathering process. For example, it would be acceptable to ask the following questions of all clients:[2]


1.      Overall, how would you rate your health during the past 4 weeks?
     Excellent Very Good Good Fair Poor Very Poor


2.      During the past 4 weeks, how much did physical health problems limit your usual physical activities (such as walking or climbing stairs)?
Not at all Very little Somewhat Quite a lot Could not do physical activities


3.      During the past 4 weeks, how much difficulty did you have doing your daily work, both at home and away from home, because of your physical health?
None at all A little bit Some Quite a lot Could not do daily work


4.      How much bodily pain have you had during the past 4 weeks?
None Very mild Mile Moderate Severe Very severe


5.      During the past 4 weeks, how much energy did you have?
  Very much Quite a lot Some A little None

It would be inappropriate, and potentially illegal, for a non-licensed professional to then use the information obtained to make a diagnosis of, say, depression. On the other hand, a financial therapist could certainly use data obtained from a client from these questions to obtain a more comprehensive picture of the client’s situation. If, based on the scoring methodology of the questions or scales used, a client appeared to be at risk either mentally or physiologically, this should prompt two actions: (1) a discussion with the client and (2) a potential referral to a licensed professional who could legally make a diagnosis. This entire point is mute, however, if the financial therapist is licensed to provide a diagnosis.

The confusion over assessment and diagnosis is one that has hampered the growth of financial therapy. Financial professionals have been told that they cannot diagnose clients. This is absolutely the case. What is forgotten, or conveniently not disclosed by the person making the statement, is that an assessment is not a diagnosis. This leads into the second area of confusion surrounding the practice of financial therapy, and that is the word therapy.

Therapy is a curative process that is designed to help others obtain relief from a presenting problem. Anyone may act therapeutically by exhibiting signs of caring, empathy, and helpfulness. To be therapeutic does not require a legal ability to make a diagnosis or the use of a license.

A similar level of confusion exists for mental health professionals who want to provide financial therapy services. Under federal and state mandates, it is against the law to provide investment advice for a fee without being duly registered with an appropriate authority (e.g., Securities and Exchange Commission) or being licensed by the Financial Industry Regulatory Authority (FINRA). This rule does not, however, prohibit someone—anyone for that matter—providing financial education or information about investments or advice about non-investment financial strategies. Just as a non-mental health licensed financial therapist would refer a client to another professional for a mental health diagnosis, a non-investment licensed/registered financial therapist would refer a client to another professional for specific investment advice and counsel. Or the mental health professional could obtain the appropriate license/registration to begin making investment recommendations. The key element is this: a financial therapist must provide services within their scope of practice. This is a clear practice standard for all Financial Therapy Association members.

The Financial Therapist-Client Engagement

Consider again the three pathways to financial therapy practice. Because nearly every practicing financial therapist has come to the field from either financial planning/counseling or mental health, most have had a difficult time describing when one service is being offered versus another. Financial planners/counselors often say something like, “How do I know when I am practicing as a financial planner versus a financial therapist? After all, I went into financial therapy in order to incorporate therapeutic techniques into my daily practice.” This is important because under Financial Therapy Association practice standards, a financial therapist may not have a dual relationship with a client. This means, quite simply, that a client is a client, not a client and friend or client and colleague. The line between therapist and client is sacred and distinct. This is not the practice among financial planners/counselors who regularly meet with their clients in social situations. How then does a financial therapist who is not also a mental health professional deal with this situation?

The answer is quite simple and straightforward: the client engagement or contract dictates whether a client is a financial therapy, financial planning/counseling, or mental health client. What doorway is the client entering the relationship? If the arrangement is a financial planning/counseling engagement, the rules dictating the professional’s practice are in play. If the contract is based on receiving mental health services, then those rules and regulations apply. If the engagement is for financial therapy, then the practice standards and code of ethics as outlined by the Financial Therapy Association apply.

Of course, this leads to an ancillary question, namely, what if the client wants to change from financial planning/counseling or mental health services to financial therapy? Again, the solution is defined by the engagement process. When and if this were to occur, the professional would need to disclose and explain to the client that this step entails a new client engagement, and that going forward, a new set of standards applies. This is no different than the situation for a dually-registered financial professional who is licensed by FINRA while being registered by the SEC. Under one situation (FINRA), suitability rules apply, whereas under other cases (SEC) the fiduciary standard applies. It is the legal and moral responsibility of the financial professional to disclose when he or she is working under a new engagement. Similarly, a financial therapist is under an obligation to disclose the applicable practice standards associated with financial therapy and to obtain a new client engagement before providing services.

As illustrated in these examples, it is possible to work primarily as a financial planner/counselor or mental health professional and occasionally provide financial therapy services. It is also possible to be engaged in financial therapy services on a full-time basis. The contract or client engagement will dictate what is appropriate and when such services can be appropriately provided.


The worries expressed by practicing financial planners/counselors and mental health professionals about the role of financial therapy are legitimate; however, nearly all the unease stems from the lens in which the financial therapy stakeholder is viewing the situation. The Practice Standards promulgated by the Financial Therapy Association clearly indicate that a certified financial therapist (e.g., CFT-I) must provide services within his or her scope of practice. If the professional is not a licensed mental health professional he or she may not make mental health diagnoses, although he or she may use psychological, behavioral, and attitudinal assessments in their practice. Mental health professionals who are not licensed or registered to provide investment advice may not provide direct investment recommendations, but they may teach, inform, and discuss financial and investment topics with clients. In both scenarios, a financial therapist can (and must) be therapeutic when delivering services. The type of service provided will be dictated by the client engagement and the professional’s scope of practice.

It is entirely possible that within 10 years this review will be obsolete and read only as a curious insight into the beginnings of a new profession. If financial therapy does blossom as a profession, then the pathway to becoming a financial therapist will be more structured. Rather than come from current financial planning/counseling and mental health fields, financial therapists will receive education and training holistically and enter the field as a “financial therapist.” The rules regarding practice standards will need to be expanded to determine when it is appropriate for a non-certified financial therapist to practice. The profession is obviously not in that position yet, but that day is coming soon.



[1] The information presented in this review does not necessarily represent the opinion or stance of the Financial Therapy Association or any other organization or institution. The opinions expressed are those of the author.

[2] These items were taken from the Healthy Living Questionnaire ( from the US Department of Health and Human Services.

Social Work Treatment Plans

Frequently, financial planners experience the frustration of clients failing to follow recommendations. A planner might spend hours reviewing the tax code, filling out paperwork, developing meeting materials, analyzing information, and developing a comprehensive financial plan. Sometimes a planner presents the plan only to have a client nod and agree but later fail to implement recommendations. This can be annoying and confusing for both the financial planner and client. It is reasonable to ask why this sometimes happens. When implementation stagnation occurs it may be time to help a client think about the ways behavioral and relational problems impact the household financial situation.

Financial therapy provides one way to help financial planners start complex behavioral questions with their clients. Financial therapy draws from research and practices in the fields of financial planning, marriage and family therapy, social work, and other fields to address complex problems that can devastate a client’s financial situation. For example, a planner may notice clients with marriage problems that are bringing the couple to the brink of divorce. Not only will divorce devastate the financial plan, it may tear apart the family as well. In this situation, a financial planner could address the financial implications of the impending divorce while a marriage and family therapist could address the relational and psychological issues present in the situation; however, a financial therapist might address the broader spectrum of issues rather than focusing only on financial or relational issues.

This semester, the Lab team has been hosting a monthly seminar series where a small group of faculty members, practitioners, and graduate students meet to discuss current research and develop innovative research ideas based on connections between allied fields.

During the most recent seminar, a group from the fields of financial planning, marriage and family therapy, and social work gathered to discuss the application of social work treatment plans to the fields of financial planning and financial therapy in order to address financial, behavioral, and relational issues simultaneously.

Social work treatment plans are frequently used to develop an effective strategy to treat problem behaviors identified by a social worker and the client. As in the financial planning process, social workers help their clients identify goals, the problem behaviors preventing the achievement of their goals, and the steps that need to be taken to reach goals. Treatment plans, like targeted financial plans, must be adapted to account for changes in circumstances and attitudes. Social work treatment plans tend to be very strategic and goal oriented. These plans leave enough room for creative development to accommodate changes needed over time. Financial planners and financial therapists can learn a lot from the way social workers interact with their clients using treatment plans.

Treatment plans have four elements: problem statements, goals and objectives, interventions, and duration of treatment. Problem statements should concisely state the problems that are identified by both the client and the social worker in a full assessment of the client’s needs and circumstances. Problems that are most urgent or have the greatest short term impact (i.e., crises) should be listed first. Problems which are the root cause of other problems should also be prioritized. Second, treatment plans list the treatment goals that address the specific problems which have been identified. Underneath each goal are the objectives, which are broad descriptions of desired outcomes. Finally, the treatment plan describes which interventions will be implemented to accomplish the desired outcomes and outlines the duration of the intervention’s implementation.

When financial planners need to address stressful situations when working with clients, the traditional financial plan may not be as useful as a treatment plan. Thinking about interventions to address behavioral issues during the planning process can help planners better serve their clients and make a more meaningful impact. Future research is needed to address the lack of evidence-based financial planning interventions available to planners. Future research should endeavor to find and test interventions and solutions which can help clients achieve lasting behavioral change and address both their financial and relational problems. Lab seminars are one way we hope to launch some of these efforts.

Michelle Kruger