How Financial Planning Becomes Therapy
Wealth Advisor, Madeline Valente CFP® is quoted in this US News and World Report Article about the psychology of financial planning.
A financial planner, René Bruer likes to joke that instead of earning his MBA in finance, he should have studied psychology.
A certified financial planner based in Tallahassee, Florida, Bruer estimates only 20 percent of his time with clients is spent talking about actual finances. The other 80 percent of the time, he's playing the role of therapist. That's because investors can often be tempted to make rash decisions as they react to economic or political news, or personal events. It is Bruer's job to help clients understand how money gets entangled with their fears and emotions, all while reminding them to stick to their long-term investment strategy.
Sometimes that means extending what was supposed to be just an hour-long meeting to five hours as the clients suddenly disclose they're on the verge of a divorce. It can also involve drying a client's tears after the loss of a loved one or a cancer diagnosis. Traditionally taboo topics like faith and politics are on the table too, leading to some delicate conversations about how news events or an election cycle may heighten emotions or fears and lead to irrational decisions about money.
"We always talk about money in numbers – this fund versus that fund – but the reality is the emotions are what drives behavior, and ultimately we need to understand those habits and emotions," Bruer says.