Integrating psychology into financial planning requires a clear understanding of the boundaries between the roles of a financial planner and a mental health provider. These boundaries are important for many reasons, including the need to abide by the strict ethical codes that have been established in the mental health profession. We describe these in detail in the accompanying book, Psychology of Financial Planning. However, they are so important that we included an excerpt here.

This illustration is designed to highlight the difference between the role of the financial planner and that of a mental health professional. It is critical to understand that a financial planner is not a mental health provider. In fact, it would be unethical for a mental health provider, acting in their role as a mental health provider, to also manage their client's money. As such, when a client is exhibiting mental health–related concerns – including a money disorder (e.g., compulsive buying disorder), anxiety, or depression – a financial planner would not attempt to “treat” the client. When a client exhibits signs of a mental disorder, the financial planner should consider making a referral to a mental health provider who can diagnose and treat the potential disorder. The financial planner would never attempt to “diagnose” a client, but rather make a referral because the client is exhibiting behaviors that appear to be impairing their functioning in one or more areas of their life (e.g. emotional, occupational, and/or relational functioning) and are getting in the way of the financial planning process. The referral could happen at the beginning of the financial planning process or at some point later in the relationship.

When and How to Refer

A financial planner will often make referrals to other professionals, such as a CPA, an estate planning attorney, or an insurance specialist. At some point a financial planner is also likely to encounter times when the best option would be to refer their client to a mental health provider. For instance, if a client is experiencing panic attacks related to their financial concerns, a referral to a mental health provider may be in order. The client will not be able to hear or follow through on the planner's recommendations if they are in a state of acute anxiety. It is reasonable for the planner to postpone tackling certain aspects of the financial planning process until the client is getting help for their anxiety, or they may decide to work in tandem with a mental health provider, depending on the severity of the client's needs.

The best way to know when to refer a client is if they seem stuck and the planner has run out of all the tools they are qualified to use. A planner who understands their client's financial psychology, is comfortable with a client expressing emotions, is a good listener, and can skillfully employ one or more of the communication and counseling tactics in this book may be able to help facilitate behavioral change in their client. However, despite a financial planner's best efforts, some clients may struggle to move forward and/or keep engaging in financially self‐destructive behaviors despite the consequences.

Some indicators that it may be time to refer the client to a mental health provider include the following:

• Severe symptoms of depression or anxiety
• Addiction, compulsive behaviors, or money disorders
• A history of trauma surrounding money
• A chronic inability to implement financial plans or change destructive behaviors
• High conflict between couples and/or families
• A chronic inability to communicate openly and transparently about finances
• Other mental health issues that are negatively impacting a client's emotional, occupational, or social abilities and functioning

It is important to use discretion when deciding whether to refer a client to a psychotherapist. The planner should refrain from making assumptions about the client based only on the circumstances. A client with a previous money disorder, for example, may be at a place in their life where they are ready to make the necessary changes based on the financial planner's recommendations. A skilled planner may be the right professional to guide the client out of their old behaviors and into a healthier course of action. That is why it is crucial for a planner to consider the client's behaviors, emotions, and history, as well as their own reactions and emotions.

If the planner is feeling uncomfortable, fearful, or nervous around a client, it is a good indicator that they should consider bringing in another professional to help. Sometimes referring a client to someone else is the best thing a planner can do for them. It is important for the planner to understand that making a referral does not equal quitting or an admission of incompetence. Rather, it is a sign that the planner is skilled and practiced enough to recognize the signs that the client would benefit from the expertise of a professional from a different field. During every interaction, whether the planner decides to refer or not, the client's needs and well‐being should be paramount.

Ethical Considerations

The psychology of financial planning requires the planner to be aware of what is happening inside the client's mind. While it can be beneficial for a planner to understand a client's psychology, it is important for financial planners to understand their own professional limitations. A planner can distinguish the appropriate guidelines and boundaries around inner psychological work with clients by examining the Ethical Principles of Psychologists and Code of Conduct for the American Psychological Association¹ and the Code of Ethics and Professional Responsibility for the Certified Financial Planner² Board of Standards.³ Both codes require that a practitioner work only within the boundaries of their professional competence.

Another critical ethical consideration for mental health practitioners is to avoid multiple relationships with clients.⁴ It would be unethical for someone acting in the role of a mental health therapist to also work in the role of financial planner with the same client – even if they are qualified to do both. To protect clients and maintain the sanctity of the mental health therapist‐client relationship, the mental health provider must avoid having such multiple relationships with their clients, as it could put their clients at risk. For example, if a person and/or a firm is providing mental health therapy and financial planning to the same client, what if a client relies on their therapeutic support but is unhappy with the financial planning element? To maintain the therapeutic relationship, which may be essential to their mental health stability, they might feel compelled to stay with the financial planning component even though they believe that doing so is no longer in their best interest. This type of situation puts the client's best interests at risk, which is why it is strictly forbidden under mental health practitioner ethical guidelines.

Conclusion

We hope that the exercises in this book, and the information in its companion, Psychology of Financial Planning: Practitioner's Guide to Money and Behavior, provide you with the insights and tools you need to integrate the psychology of financial planning into your work with clients. We hope they provide you with a better understanding of your financial psychology so you can better engage and serve clients from diverse backgrounds to improve their lives in meaningful ways.