How can you get people to pay attention to their financial affairs?
Polls often show money to be a leading source of worry for people and it’s also one of the main causes of rows between couples. But this doesn’t seem to be related to how much money one has – the rich also have sleepless nights over their piles of cash, according to Capgemini’s annual World Wealth Report. They tend to worry about how to maintain their lifestyles and whether their children will be able to effectively manage their vast inheritance. Cue ‘Financial Therapy’. The Guardian recently published an article about this field which is becoming increasingly popular in the US, where there is a five year-old Financial Therapy Association with more than 250 members. According to the Guardian, it ‘combines traditional financial advice with a more touchy-feely psychological exploration of what is driving a client’s behaviour towards money’.
How does it work? As with most forms of therapy, Financial Therapy would explore the client’s psychological ‘blocks’ about money and make use of classic financial planning tools such as balance sheets and cash flows.
Financial advisers, of course, know all about behavioural finance and can take many of the ideas and lessons from this field and make use of it with their clients in a number of ways – so perhaps it’s becoming more mainstream.