Welcome, everyone! Welcome to the 76th episode of the Financial Advisor Success Podcast!
My guest on today’s podcast is Kristy Archuleta. Kristy is an Associate Professor in the financial planning program at Kansas State University, with a focus on teaching advisors how to actually change their clients’ behaviors for the better.
What’s unique about Kristy, though, is that she’s also a licensed marriage and family therapist, and comes to the world of financial planning and how to help clients improve their financial behaviors with the perspective of a trained psychologist.
In this episode, we talk in depth about Kristy’s work at the intersection of financial planning and financial therapy, how a financial therapist would view common financial planning challenges from a different perspective with different solutions, the way that therapists approach helping clients to change their behavior by recognizing that clients are the best experts in their own lives, and why according to the best practices research of therapists themselves, what financial advisors typically do – give advice with a comprehensive list of recommendations to their clients about how to improve their financial lives – is actually not a good way to get them to change their financial behaviors for the better.
We also talk about Kristy’s work in helping to co-found the Financial Therapy Association, the development of a new Certified Financial Therapist (or “CFT”) program they’re developing, why Kristy anticipates that financial therapy will eventually become a specialization path for financial planners… and where the line should still be drawn between the end of what advisors can do by providing financial therapy, and when it may still be necessary to involve a fully licensed mental health professional on the client’s behalf.
And be certain to listen to the end, where Kristy talks about her own upcoming transition, from teaching financial planning and financial therapy at Kansas State University, to joining the financial planning program at the University of Georgia, to hopefully help them build more insights from financial therapy into their core financial planning curriculum as well.
So whether you are interested in learning more about the intersection between financial planning and financial therapy, how financial therapy can help clients improve their financial behaviors, or how financial therapists can become certified through programs such as the CFT, I hope you enjoy this episode of the Financial Advisor Success podcast!
What You’ll Learn In This Podcast Episode
- What financial therapy is. [5:50]
- What kinds of major financial issues families and couples face. [18:19]
- The new certification the Financial Therapy Association is working on developing. [18:19]
- The distinction between financial therapy and life planning. [29:47]
- The number one thing that creates client change. [29:47]
- The conflicts financial advisors can inadvertently cause in relationships. [40:20]
- Why giving clients advice and a comprehensive list of recommendations is not a good way to get them to improve their financial behaviors. [40:20]
- How Kristy got into this line of work. [1:01:04]
- What Kristy anticipates for the future of financial planning and financial therapy. [1:15:15]
- How Kristy defines success. [1:39:51]
Resources Featured In This Episode:
- Kristy Archuleta
- Kansas State University Financial Planning Program
- University of Georgia Financial Planning Program
- Financial Therapy Association
- Certified Financial Therapist
- Journal of Financial Therapy
- United Capital’s Life Management Guidebook
- The History of Financial Planning by Denby Brandon Jr. and Oliver Welch
- Creighton Certificate in Financial Psychology & Behavioral Finance
- Golden Gate University Certified in Financial Life Planning
- Money Habitudes
- ASPIRE Clinic at University of Georgia
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Full Transcript: Why Financial Therapy Is Better Than Financial Advice To Help Clients Change Their Behavior with Kristy Archuleta
Michael: Welcome, everyone. Welcome to the 76th episode of the “Financial Advisor Success” podcast. My guest on today’s podcast is Kristy Archuleta. Kristy is an associate professor in the financial planning program at Kansas State University, with a focus on teaching advisors how to actually change their clients’ behaviors for the better. What’s unique about Kristy, though, is that she’s also a licensed marriage and family therapist and comes to the world of financial planning in how to help clients to improve their financial behaviors with the perspective of a trained psychologist.
In this episode, we talk in depth about Kristy’s work at the intersection of financial planning and financial therapy, how a financial therapist would view common financial planning challenges from a different perspective with different solutions, the way that therapists approach helping clients to change their behavior by recognizing that clients are the best experts in their own lives, and why according to the best practices research of therapists themselves, what we as financial advisors typically do, give advice with a comprehensive list of recommendations to clients about how to improve their financial lives, is actually not a good way to get them to change their financial behaviors for the better.
We also talk about Kristy’s work in helping to co-found the Financial Therapy Association, the development of a new Certified Financial Therapist or CFT program they’re developing, why Kristy anticipates that financial therapy will eventually become a specialization path for financial planners, and where the line should still be drawn between the end of what advisors can do by providing financial therapy and when it may still be necessary to involve a fully licensed mental health professional on behalf of a client.
And be certain to listen to the end, where Kristy talks about her own upcoming transition from teaching financial planning and financial therapy at Kansas State University to joining the faculty of the financial planning program at the University of Georgia, to hopefully help them build more insights from financial therapy into their core financial planning curriculum as well.
And so with that introduction, I hope you enjoy this episode of the “Financial Advisor Success” podcast with Kristy Archuleta.
Welcome, Kristy Archuleta, to the “Financial Advisor Success” podcast.
Kristy: Thanks. It’s great to be here.
Michael: I’m excited about the podcast today because you come with I think a truly unique perspective on our financial planning world and maybe where our whole profession and value proposition as advisors is shifting in the future. Because you are a licensed marriage and family therapist and a teacher at the Kansas State financial planning program, and I know have done a lot of work over the years in kind of this intersection of financial planning and financial counseling or financial planning and financial therapy.
And, you know, as many folks know, as listeners to the podcast, like, I was a psychology major as an undergrad, so I’ve always had this attachment back to the psychology roots of financial planning and working with clients and client communication. And so now, like, 20 years later, it’s fascinating to me to watch all of us converge back on the psychology realms as technology is starting to commoditize all the product parts and most of what we do is these actual conversations with clients that we don’t really get trained in as financial advisors.
Kristy: Yeah, that’s true. I was actually just thinking back, you know, when I started developing this interest, I had no idea that I would be kind of, like, the odd person that was wanting to intersect marriage and family therapy, which is my specific background, and financial planning and financial counseling together. And even coming in and working in academia, in a financial planning program with this kind of background, even just publishing research related to the topic was difficult because researchers, like, there weren’t a lot of researchers that were doing that kind of work at the time. And it was not largely accepted by really the field and the community.
Michael: Meaning not accepted by the marriage and family therapy community to do financial planning stuff, or not accepted by the financial planning community to do marriage and family therapy?
Kristy: And so it just seemed, like, kind of being this odd person, like, “Do I really fit into a financial planning program? Do I really fit into a marriage and family therapy program from an academic standpoint in terms of being a professor in one of those types of programs?” And so now it’s interesting to see, you know, even 10 years later that we’re really, especially in the financial planning, really trying to marry the two together so that we can work with our clients and be more effective with them.
And so now we see more people gravitating towards psychology, marriage and family therapy and grasping onto some of those skill sets and those tools that will help financial planning clients ultimately meet their goals. And so, just like you were saying, it’s interesting to see the shift that we’ve made in the last 10, 20 years, even in the last 5 years, really, towards accepting and acknowledging that these softer skills are really, really important to the kind of work that we do.
What Financial Therapy Is [5:50]
Michael: So maybe as a starting point, can you just set a little bit more context for, you know, most advisors who are listening don’t have any background in psychology and, like, the fields and domains of psychology, so can you just give us a little bit more context of, like, what exactly do you do in the world of marriage and family therapy? Like, how do we think about what this is in the broader context of psychology?
Kristy: Sure. So I think in terms of mental health, so kind of think about this large playing field of mental health, you have different fields which basically are driven by theory. And so you have psychology, which is, you know, really kind of started out with the Freudian theories and developed. So it’s really individual, brain-based, mostly around psychology. You might have heard of social work, which is really dealing with social systems and how people interact with social systems, and how those social systems interact with them. And then you have marriage and family therapy, which is based on family systems theory. So looking at how an individual interacts with family and how family interacts with an individual.
And so one of the analogies I like to use when explaining, you know, what family systems theory is, is if you think about a mobile, like a baby mobile that’s hanging above a baby’s crib and you have all of the different parts hanging from that mobile, and most of the time you know that mobile is balanced and so it hangs. But if you move any part of that mobile, so you slide one of those toys over one way or another way, it shifts, it tips the balance of that mobile. And that’s how we kind of think about family systems theory is if one person makes a change, it’s going to impact the whole entire family. And if the family makes a change, it’s going to have an impact on all of the different individuals in that family.
And so that’s the framework in which I was trained in. So I have a master’s degree and a Ph.D. in marriage and family therapy. And my Ph.D., I did an emphasis, is what we called it, in personal financial planning. And so that’s how I brought those two together. And so, yeah, it’s bringing family systems theory and looking at, you know, how do relationships impact individual behavior, how does individual behavior impact relationships among couples and families. So it’s not just looking at, you know, one piece, looking at multiple pieces of a holistic aspect of how individuals and families work together.
Michael: So can you give us some examples of what this looks like? I guess, I don’t know, like, things working well or things not working well. Like, when you’re a marriage and family therapist, like, what are you even trying to therapy? Like, what are you typically trying to do to change someone’s situation to improve and help them?
Kristy: Sure. So it really…obviously it depends on whatever the presenting problem is. And so let’s say someone comes in and they are having a…let’s say that they’re having a…it’s a couple having a financial conflict, or even better yet, it’s a parent-child having a conflict in terms of managing a family business. Sometimes that’s a really good example that’s often used, especially when explaining family systems theory in a financial context. And, you know, what are those ideas that the older generation has brought in and the younger generation has brought in and now there’s some imbalance in terms of what are the goals for the business?
So the goal might be, “How can we transition from one generation to the next generation?” Or, “How can we work together?” And so taking from a family systems perspective, we’d be looking at the whole family in context. So how does…let’s say it’s a father-son, just to kind of use a generic example, how do the siblings fit into this piece? How does the mom fit into this piece? How has that shaped how this family operates? With the goal that we’re maintaining or we’re building stronger family relationships, yet we’re successfully passing the business or having the father-son working more collaboratively together.
So it could be a very anxious time at this point of this family business transition for multiple reasons. Because the father might be having a difficult time giving up ownership or decision-making authority, just nervous about having his child take on all of this responsibility. It might be the same for the child taking on this responsibility, except maybe they’re very excited to do it. Maybe the mom has been protecting the son from making decisions, and so there’s this fear that maybe they won’t be able to make the decisions that they need to make, or maybe there’s some enmeshment types of issues going on where the mom and the son are aligned and they gang up against the dad, or however that might look.
So it can get really complicated really fast if you’re thinking about it from a family systems perspective. But I think that gives an idea that we’re looking at all of the pieces that go into the well-being. Relational well-being, financial well-being if you’re looking at, you know, a financial-related problem. And how can we maintain and build those relationships so that they’re successful personally and professionally? I hope that that helps to make sense of that and I didn’t confuse further.
Michael: No, no, I think that helps. And, I mean, it certainly makes the point of the different frame of reference, right? When I hear in, like, traditional financial planning context, you know, we’re working on a family business succession planning issue, right? We’re thinking like, “Buy-sell agreements and what are the terms? And how are you setting the valuation? Is there proper life insurance that the son can buy out in case the dad dies early?” And, you know, maybe a little bit of family dynamics like, “Well, if one son is going to inherit and take over the business, we probably need, like, some life insurance so that the other kids can get their respective shares because the business might be illiquid and, you know, we’re going to create or family strife if the whole business goes to one child but the other two siblings get disinherited.”
So, like, you know, we come at it and there’s some money issues and financial issues and maybe some pieces of family dynamics like equalize the estate, but, you know, certainly not getting down to the, you know, is dad having trouble giving up control and is son afraid to take control because he’s never made decisions because his mom used to shelter him from taking decisions and now he’s going to deal with this? So I get the distinction. So in the family therapist context, like, what would you be doing to help that family through those issues?
Kristy: Yeah. So what would we be doing? So there are different modalities in which we might use that are rooted in family systems. So we might be utilizing, an approach that I like a lot is solution-focused therapy, which is really very positive, future-oriented. It’s not really looking at the past and how this came to be. It’s not really looking at why is mom and son having an enmeshed relationship? Why is son and dad having a conflictual relationship? It’s looking at, “How can we kind of restructure? How can we help in the present time move forward?” So what’s currently working that the family is doing? And maybe we need to do more of those types of things in order to make the family work best.
So maybe it’s, you know, what’s working really well is that the father and son are now spending some time together, really getting to know each other a little bit better because maybe before it’s been mom and son because of that enmeshed relationship. And when I say enmeshed relationship, that means almost like a relationship that’s too close for comfort.
Michael: Yeah, plenty of stereotypes, I think, out there of, you know, young men who are a little bit too enmeshed to relying on a mother. So, yeah, I think we can paint that picture.
Kristy: Yeah, yeah. So you have trouble distinguishing kind of your own thoughts from feelings. And so maybe you aren’t able to make decisions because you have this emotional relationship. You just do what mom says. So one of the things is, you know, what’s working really well, and keep doing more of that.
And prior to that, you know, looking at what’s the goal for the family? What are the best hopes for the family? And so there’s very specific interventions. So sometimes that’s kind of a scary word when I bring that up to financial planners or financial counselors. Like, “Interventions, what does that mean?” Well, an intervention is really a tool to help you change a client’s behavior. And so the idea of solution-focused is, you know, utilizing the client’s strengths and the client’s own tools that they have in order to help them create change. Because if they come up with what will work best for them and it’s their own idea then they’re more likely to implement it and stick with it.
And so the other piece of this solution-focused approach is really taking small steps and just doing a little bit at a time, so really moving slowly, which is interesting because solution-focused therapy is meant to be a brief therapy. So that almost sounds contradictive that you would say that go slowly but this is really a brief treatment. And let me explain the difference. So brief treatment, typical range of time for the number of sessions a family therapist might meet with a client is, like, five to eight sessions before they’re done with their clinical goals and then they would end therapy treatment. Versus maybe a psychology approach, a psychosocial approach where it might be 20 sessions, or, you know, you might be treating somebody for an entire lifetime. And some of that is based on the modality that you’re using, you know, the theoretical perspective that you’re utilizing, the presenting problem, and what works best for the client.
So with this shorter, brief therapy, which is considered to be about five to eight sessions with solution focus, the goal is…one of the principles is to move slowly with the client, with the idea that if they’re doing what they come up with that’s going to work best in their own lives and they’re implementing that and they’re trying it, when they see those successes, they’re going to do more, and that they’re going to see those changes and small changes can turn into big changes.
And so maybe, you know, starting out meeting with…what they’re saying is meeting with…the father and the son are having regular meetings together, and, you know, maybe they have to keep them brief. You know, maybe when they do 30-minute meetings is a whole lot better than when they do an hour meeting because they have too much time to dig in and nitpick, and so having really focused 30-minute meetings.
And so saying, “Hey, okay, what if…do you think that that’s a…is that something that you think that you could do this week or you could try this week? It seems to be working well.” And they could say, “Yeah, you know what? Let’s try meeting twice this week and only meeting for 30 minutes apiece and having very focused agenda items to talk about.” Then they might see, “Hey, you know what? Our relationship is improving because we’re not spending a lot…we don’t have all that extra time to start nitpicking or nagging at each other.” So that’s just an example.
The Types Of Major Financial Issues That Families And Couples Face [18:19]
Michael: So, as someone that’s kind of living at this in the intersections of financial planning and financial therapy, like, how do you see this playing out in advisor relationship? Like, is this the kind of thing where you think we should ultimately be getting trained and having these kinds of skill sets and facilitating these kinds of conversations, or do you envision a future where there’s just, like, a closer relationship between advisors and marriage and family therapists that when we’re doing this succession planning process with clients because maybe they came to us because of some financial issues and figuring out a buy-sell agreement and insurance and whatever it is, and then we get in and say like, “Oh, man, you’ve got some family issues here, like, we’ve got to bring someone in to help you all work through this. I’ll be going along but, like, we’re bringing in a marriage and family therapist to work on this.”
So do you see advisors being trained in this direction or do you see this as more of the future is some kind of cross-collaboration world where marriage and family therapists sit alongside advisors more often?
Kristy: Yeah. So I definitely see financial planners being more accepting, whether it’s that they want to be trained in this area or they want to work with someone. They want somebody else to come in and do that family piece. And so I’ve been very active in the Financial Therapy Association and was longtime board member, and still serve on our regulatory board as well as our certification committee. And so one of the things we are doing as an organization is developing a Certified Financial Therapist certification, which will have three different levels. And we can talk more about that. But in this development of this certification, especially at level one, it’s perfectly designed for a financial planner who wants to have the ability to be therapeutic without being a therapist.
Michael: I like that, learning to be therapeutic without being a therapist.
Kristy: Right. So without treating disorders, for examples. And when I say disorders, mental health disorders, I mean disorders that are diagnosable, that you can put up with an ICD code. So stuff like generalized anxiety disorder, depression, bipolar, those sorts of things, you’re not treating those sorts of diagnoses, but you can be therapeutic. So a licensed mental health professional such as a licensed psychologist, a licensed marriage and family therapist, a licensed clinical social worker, there’s a number of different types of licensures that you can get depending on the state that you live in and how that’s regulated.
Michael: And so the idea is level one of this Certified Financial Therapist certification would be for advisors who want to get more therapeutic. Then level two would get more into deeper, like, doing therapy and for people that have gone through the training and licensure of actually becoming a therapist?
Kristy: Yeah, so level one would definitely be what you just described. Somebody who is wanting to become more therapeutic, vice versa, on a mental health practitioner side. Maybe it’s someone who wants to start dealing with some of the financial aspects but more from a fundamental standpoint, maybe the budgeting aspects of working with financial issues.
Level three, I’m going to explain level three first because that’s really someone who’s crossed-trained. Maybe you’re a CFP and you’re a licensed marriage and family therapist. So you are truly cross-trained and have dual certifications. But some of this has to be worked out a little bit more, but you’d definitely be cross-trained but maybe not…you may not have to have both the licensure. But for a level three, you would definitely have to have a mental health license.
So a level two is going to be someone who has more advanced therapeutic skills but not necessarily duly licensed or duly certified for lack of better terminology if that makes sense.
Michael: Yeah, yeah. That helps. And this is a certification program you guys have launched? Launching? Like, for people who are listening and interested about this and want to try it, when do you get to sign up?
Kristy: Yeah. So actually we’re hoping to have the first round of exams in the fall. So we are currently working on exam development, competencies. We post stuff on our website just as soon as it’s available.
Michael: That’s the Financial Therapy Association website?
Kristy: It is. It is. And it’s very easy, financialtherapyassociation.org. And if you go to the education tab and then click on “certification.” that’s where all of those updates are coming.
Michael: We’ll be certain to put a link out to that in the show notes as well. So for folks who are listening, this is episode 76, so if you go to kitces.com/76, we’ll have links out for both Financial Therapy Association and the Certified Financial Therapist certification program.
Kristy: And you’ll see what’s up there right now is some of the competencies that we would expect someone to have right now. They’re more broad competencies. And we’re working on getting some of those more specific things up so people can start studying for the exam. But right now you can see that…and this would be the same for all three levels, but there’s therapeutic competencies, there’s financial competencies, and then there’s going to be financial therapy competencies, which is looking at self of the financial therapist, ethical behavior and standards of practice, money and relationships, so really integrating the two together, measurement and assessment in financial therapy, and then evaluation of financial therapy research. So understanding what some of the evidence-based research is saying and how that’s informing how we can most optimally practice and work with clients.
Michael: And ultimately, like, how does someone learn and get trained in this stuff? Like, are you envisioning that you’ll have a series of textbooks to read and this is kind of a self-study organized thing? Are you aiming to run classes or have, like, fly-in programs, “Come out for the week and we’ll train you on this?” What’s that education component going to look like?
Kristy: Yeah. So it’ll be accessible online, and there will be webinar type of classes that you can do along with a set of study materials or recommended study materials. We’re trying not to tie too much to specific content. But of course, there’s some of the content that is very financial therapy-specific. And so there’s not a ton of material that you can choose from. But for example, you know, fundamentals for the financial competencies, you know, reviewing personal finance books like Garman and Forgue’s book, Madura’s book. There’s a number of them out there. Those are just a few examples. So not tying anything specific, but that’s an example.
Michael: And then how long are you expecting it takes people kind of to go through this and learn? I guess at least level one since there’s three levels.
Kristy: I think it probably is individual-specific, but it shouldn’t take a ton of time to go through and get all of that. Some of that in the beginning is going to take a little bit longer because you’re going to be able to get the education material kind of as we’re building it. It’s not just, like, already there and you can just knock it all out all at once. Another option is, you know, there are some financial therapy programs out there. So I’m a faculty member at Kansas State University and we have an online financial therapy program. And so the education that you would get in our program would definitely meet the educational requirements for the Certified Financial Therapist.
Michael: Okay. So you’ll kind of cross-apply people in. If you actually have training and education in this then you’re waived out of some of the education components because you met them elsewhere, but then obviously you still have to do the exam. So, you know, you…
Kristy: Exactly. That’s exactly right.
Michael: So how would you distinguish a program like Kansas State’s financial therapy program versus what’s going to get taught in this CFT program? If I’m an advisor trying to, like, think through my choices, “Hey, I want to get a little more familiar with this,” like, how do my options line up between that I can go after the CFT designation, I can sign up for the Kansas State’s educational program? How do I compare these options?
Kristy: Yeah, that’s a really good question. So then what we’re building for CFT level one, remember is fundamental, I mean, basics because we want you to be able to be therapeutic. Not a therapist but therapeutic. So we want you to have some of those counseling skills that are necessary to be able to work with clients. But we also want you to have some knowledge about family relationships, family dynamics, mental health diagnosis so that you at least are aware and you’ve heard of some of these things. So you’re going to get a fairly comprehensive, fundamental overview from the CFT level one education curriculum.
I would say for the Kansas State financial therapy graduate certificate, it’s designed with four, three-credit-hour graduate-level courses, so it’s going to go in-depth because you’re spending, you know, eight weeks and they’re short courses. So you’re going to go deep into some of that content on those topics. So looking at money and relationships specifically, applied behavioral finance, an intro to financial therapy, which is really looking at kind of what’s the psychology of money? That’s where you explore money scripts and money disorders and different kinds of beliefs and attitudes and values around that. And then also research and theory in financial therapy, so looking at some of the premier research that’s happening, that’s currently informing how we think about clients, how we work with clients in the context of financial therapy, and just some of the new things that we’re learning where emotions, cognitions, relationships impact financial well-being and how finances impact our own behaviors and our own emotions, and those sorts of things.
The Difference Between Financial Therapy and Life Planning [29:47]
Michael: So some of these themes that you’re talking about kind of remind me of the discussions we’ve had in the profession frankly for the past, like, 20 years or so around life planning, and, you know, these ideas of using money to build towards your personal freedom and finding, you know, what does money really mean to you and how does it fit into your life, and trying to find those balance issues. So I’m just wondering, like, would you view, like, life planning as a domain of financial therapy or financial therapy as a domain of life planning, or, like, you know, just great minds think alike and we’ve all kind of converged at the same place, we just use different labels? Like, how do you line up the work of financial therapy and what the profession has been doing with life planning for the past decade or two?
Kristy: Yeah. So I think most who are working in this financial therapy domain would probably distinguish financial therapy differently than life planning. And so I’m speaking from me, not as an official voice of Financial Therapy Association or anything like that. I think that they can be distinguished in that the goal of financial therapy is really to change behavior or change relationship well-being or change an emotional aspect of something to help clients more optimally meet their goals and enhance their overall well-being. And so I think it’s really bringing in those therapeutic aspects. Not necessarily that…changing behavior does not mean that you are doing mental health therapy where you’re diagnosing and treating a mental health disorder, but changing or altering behavior so that you can better succeed.
And so I think financial or life planning and financial therapy, both have their places and both can be excellent paths, but it might just depend on what you’re comfortable with as a client, what you’re comfortable with as an advisor who might be utilizing those and what it is that you’re hoping to get out of it. And that’s the same for if you’re going to any type of advisor, or if you’re going to any type of mental health professional, the key piece is that you have a strong relationship with your clients.
So when we think about…kind of going on a tangent so you can pull me back if you want to. So in some of the mental health research, we think of, “What are the really important factors that impact client change?” And the number one thing that creates client change is actually the things that happen outside of that therapist-client relationship. I think you can mirror these findings with financial planners, too. But behind those things that is really out of anyone’s control are the relationship you have with your client. And so that is the second most…but the one thing that you have control of as a therapist or some control of as a therapist is the relationship that you have with your client and the client has with you. So I think that you can mirror that.
So I bring that up as an example as really it’s that relationship between client-planner, client-therapist that’s going to have the biggest impact on client change in the end. But I think the approaches and the modalities are different. Especially from a financial therapist aspect, this is being developed based on research. And so we have a journal, Journal of Financial Therapy, where we’re looking at what are those modalities that are working and that look like they’re being effective? Some of them are pilot studies, some people are working on bigger studies to look at, you know, what are these treatments that are best helping them? But we’re utilizing modalities and treatments borrowed from mental health and applying them to a financial planning, financial counseling setting to increase well-being.
Michael: So from the advisor’s perspective, like, this…I mean, I’m just sort of thinking, like, who as the advisor would want to go down this road? I mean, it’s when you’ve got these regular client situations where you’re giving financial advice and they’re not implementing it, they’re not doing it. You’re trying to figure out, like, why are they not doing it? For which the answer is often because there’s some other stuff going on beneath the surface here that you might want to be delving into a little bit more. And, like, functionally that’s where financial therapy starts to come in, or where, like, having the training of the CFT program becomes more relevant? It’s the, “How do I get these clients to actually implement when they’re not implementing?”
Kristy: Right. Exactly. Exactly. And that’s one aspect of it. So, “How do I get them to do things that they’re not doing but they should be doing? And why are they not doing those things?” So that’s certainly one indicator that, you know, financial therapy could be helpful.
I think before we were talking about, you know, how do we see this moving? So looking at, you know, is this going to be more, you know, as an integrated piece? And so I brought up the Certified Financial Therapist certification that we’re working on, or is this going to be, you know, advisors are going to invite more mental health professionals in to help, you know, treat the anxiety that they’re seeing in their sessions with their clients? The family dynamics, those sorts of things.
And I think we’ll see more of both. First of all, financial therapy, you know, this is…it’s really new. So within the last eight years, financial therapy has been something that’s become, you know, instead of a couple of people across the country who didn’t know that they were doing anything, doing the same things, that they were the only ones doing this kind of work, into what is being developed into a field and then into a profession. And so that wasn’t available before. There are definitely some planners who have been, you know, doing this kind of work and saying, “Hey, I’m a planner, I’m bringing in a mental health therapist.” And I think that’s attractive to some planners who are maybe afraid that or don’t feel confident in maybe their ability to be therapeutic, or maybe they just feel like maybe they may have clients where they need to go in deeper, and it’s beyond what their skill set is.
And I think that’s important because just because maybe next year you passed all of the requirements to be a CFT-I, you still have a scope of practice. That doesn’t mean that you can do everything. And so what is your scope of practice? And knowing what it is that you have the skill set to do and what it is that you cannot do. And so bringing in a mental health therapist or referring to a mental health therapist that does have that skill set, I think we’re going to see that that’s also more common. And how do you bring that up with clients so that it’s not weird and strange?
Michael: How do you bring that up with clients so it’s not weird and strange?
Kristy: Yeah. So, you know, first of all when a client comes in and then they’re conflictual and let’s say that they’re just fighting in front of you, they know that they’re fighting and they know that they’re frustrated. You know, saying, “Hey, you know what? I have a colleague who is a relationship expert, and I’m wondering if you would be interested in talking with this relationship expert because I’m wondering if this is something that could help this whole process. And maybe I can invite that relationship expert in and we can meet with them together if you’re more comfortable with that. Or here’s their name and number if you are interested. And feel free to call them.”
Depending on what kind of relationship you have with that mental health expert or that relationship expert, giving them resources to be able to reach out. Isn’t that what financial planners should be doing is recognizing, “Hey, this is something that’s getting in the way of your financial plan and meeting your financial goals.” You kind of have an obligation to say, you know, “Here’s some resources that might be helpful to you,” and then it’s up to the client to take those on.
So sometimes it’s having challenging, difficult conversations about difficult issues but helping to normalize the situation that, “Hey, you know what? Everybody, all couples have conflict. And if they don’t they’re probably not talking about something that they should be talking about. But there are points in time where all couples have conflict about something, and sometimes they need a little bit of extra help.” And you can talk about another client that you have seen this happen with. So it’s really important to normalize and then make that referral or offer those resources.
Michael: There’s a challenge, I think, in financial planning that with couples, we ask all these questions about their hopes, dreams, goals, and wishes. You know, “When do you want to retire and where do you want to live? What would you want your future to look like? Because, you know, I’m going to do me some financial planning and figure out how to give you the best recommendations to get to that goal.” And you do that with couples and then discover in the process of asking those questions that they don’t have the same goals.
Kristy: And that might be the first time they realize that because maybe they didn’t talk about it before.
The Conflicts That Advisors Can Inadvertently Cause In Relationships [40:20]
Michael: “Where do you want to retire?” “You know, I’ve always wanted to go to Scottsdale.” It’s like, “Are you kidding? No, we’re going to Philly because that’s where the grandkids are.” Like, “Wait, we know that we were going to go to Scottsdale.” “No, we’re going to go to Philly.” And all of a sudden we introduce these conflicts when we ask these future…I think particularly when we ask the future questions, right? Because when…most couples, most of us just we’re living in the here and now and just doing the blocking and tackling of day-to-day.
So, you know, when a couple has a child, like, they’re just figuring out how to deal with childcare and, “Is the baby healthy?” And all the rest of that. It takes us to sit down and say, “So how do you want to plan for your child’s college education?” And then one person says, “Well, you know, family first. Like, we absolutely have to prioritize saving for little Johnny’s college.” And then the other spouse says, “No, no, no, I paid my way through college, I want Johnny to learn the same lesson.” And it’s like, “Wait a minute, y’all got to figure this out between the two of you because I don’t know what I’m supposed to do a financial plan for now.”
And, you know, as I like to joke, like, I’ve been married a couple of years now so I’ve learned the proper way you handle the situations you fight in the car on the way home, but it means we don’t…we as advisors don’t necessarily see the marital strife that we start creating when we ask all of those future-oriented goals questions that puts goal discussions on the table that couples have never necessarily had before. And then it’s kind of like setting off a bomb in their relationship and then walking away, or they walk away and we didn’t even realize we set off a bomb because they’re fighting in the car on the way home.
It does strike me, we have no…I mean, not only do we not have training in that but, like, historically, I think for most of us advisors, like, you know, clients where you give them recommendations and then they don’t take the recommendations and do them and follow through on them, like, in our world, we usually call those bad clients. Good clients, I tell them what to do and I give them all the recommendations, they go and do immediately by the next meeting. Bad clients, I give them all the recommendations and they don’t do it, and then they come in the next meeting and they still haven’t done it. And I remind them all the stuff they have to do and they still haven’t done it. And then they come in the next meeting and they still haven’t done it. Like, those are really bad clients. They’re not taking my advice and they’re paying for it, so eventually, we terminate those relationships because they’re not working.
And all of it is sort of, like, it all puts the onus on the client. Like, they’re a bad client because they’re not implementing. And it’s always struck me that we have a little bit of a gap in I think the profession how we handle it right now, that, like, no one ever seems to say, “Well, maybe it’s the advisor’s fault because that was a lousy way to have that conversation around couples goal-setting, and you freaked them out and they’re not implementing the recommendations because you created a marital problem that you’re not talking about.”
Kristy: Yeah, yeah. And was just thinking, you know, a number of things. I think that this happens all of the time where clients, they go away and they don’t do what you told them was the best things to do. And it could happen for a number of reason. You set the bomb off in their relationship, now they realize that they disagree on what their goals are, how they are going to pay for little Johnny’s college someday.
They also might not be ready to implement those recommendations. They might be completely overwhelmed by the recommendations that you gave them, maybe they A didn’t understand them very well because they don’t know what to do next. Maybe you explained it to them in perfect detail but maybe that is the first time that they’ve heard some of these concepts, these terms, they’re just flooded with information. And so they are overwhelmed, shut down, don’t do anything. Not ready to implement, for whatever reason, just may not have that ability to make that change or act upon that. And so there’s a number of reasons that could be emotional-related, behavioral-related, relationship-related. But if they’re repeatedly not doing what is best for them, maybe we should be exploring as planners what is best for them.
So if we’re borrowing from our mental health literature, we recognize that giving advice to our clients to change their behavior doesn’t work very well. And so when clients are able to identify what’s going to work best for them and how they can best implement that then they’re much more likely to be successful. So instead of, like, the whole checklist of the financial plan all at once, maybe it’s, “Okay, this week, or, you know, let’s…by the time we meet again, would it be helpful, or what would be most helpful for you to do as a couple in order to start reaching some of these or implementing some of these things that we need to do for your financial plan?” So breaking it down, identifying what it is that they need to do and how they’re best able to implement that.
So maybe one of them needs to go and just do some research on 529 plans or how to pay for college. Maybe the other one is ready, like, “Yes, I’m ready to go,” and so they understand what it is just because they’re more, maybe have more financial literacy, and so this is more familiar to them. And so just getting them up to speed so that they’re more in the same place. But I think sometimes we need to be more patient and recognizing, “Yeah, you know, we’re going to go at this a little bit slower,” but the clients also might implement the whole plan or three-fourths of the plan instead of none of the plan. So what really is in our client’s best interest.
Michael: There was a piece there that you said that I think is so powerful for kind of where we are as advisors and where we’re going. You know, with the rise of technology, this, like, decreasing focus on products and more and more about our advice, like, the actual advice itself, you know, there’s a big surge now in advisor saying, “Well, you know, my primary benefit that I bring to the table is helping you manage your behavior,” and we’re seeing all these discussions about behavior change, and then here you come with your, you know, actual empirical research about how this works with that very, you know, kind line you threw in there, “What the research actually says is giving advice to clients is a terrible way to help them change their behavior.” Like, our entire foundational being just got rocked a little bit right there.
I mean, it’s a striking thing to me that’s really…you know, I’m familiar with some of the research as well, like, I mean, that really is what it says. And, you know, we’ve all gone through this from time to time. Like just, you know, try telling your teenager who’s trying to establish their own sense of self, try telling them what to do and see how that goes, right? Or even for anyone who has employees, like, ordering them what to do usually is not the best way to actually get them to change their behavior. If they want to keep their jobs maybe they’ll be compliant, but, like, they tend not to own the project or the thing because you told them what to do. So advice is a terrible way to change behavior, and we are financial advisors in the behavior change business. So are we just, like, cruising for our own disaster here by trying to put all this shift and focus on behavior change when advice is a bad way to actually help people change their behavior?
Kristy: Yeah. Well, I think we have to think about it differently. So if you’re a financial advisor, you come with a very specific expertise that you want to share with someone, that they don’t have that expertise otherwise they wouldn’t be coming to you, right? So how do you take that expertise and be able to deliver it to a client that is palatable and implementable by…is implementable a word? I think I might have made the word up.
Michael: I’m good with it. I’m good with it. We want to create advice that is implementable. I’m on board.
Kristy: Yes, exactly. Awesome. It’s our own dictionary. That clients can implement. And so part of that is really understanding your clients, listening to them more than you’re giving advice to them, figuring out what works, and being very curious in terms of how the expertise that you hold as an advisor can be translated and implemented by clients. So how can that client take the knowledge that you have and implement into their own lives? So they’re the expert in their own lives.
And sometimes I think we forget that. That, “Because we’re advisors we hold all of this information and we want to share it with you, and you should do it this way. But what I’m not an expert in is what it’s like to be you every day. And so how can I understand you and how can you help me understand as a client how you can take my expertise and implement it?” And so it’s really looking for…I don’t like using this word, but it’s really looking for this bridge of, “How can we take the client and the advisor and bridge the expertises together?” Does that make sense?
Michael: Yeah, it does. And, like, when I think of it from the business end, like, what strikes me is that we do nothing to, like, measure and evaluate the outcomes as advisors, right? Like, you know, when you look at who’s the most successful advisor, it’s, you know, assets under management or revenue growth or profit margins or things like that. I don’t know any firms that measure things like, “Of the recommendations you make to clients, on average how many of them actually get implemented? And of the recommendations you make that get implemented, what’s the average time it takes for a client to implement? Like, does your average client implement a recommendation every 90 days, every 60 days or every 30 days? And if you are measuring it and your firm comes up at 87 days, what changes will you make to try to help clients implement their changes faster and increase the volume of total recommendations they implement?”
And it strikes me, like, we don’t measure it. So of course if you don’t measure it, you can’t improve it, or even realize if you’re not actually good at it because we don’t measure. Not only do we tend to not measure how many recommendations a client tends to implement, the ones that we know aren’t implementing well, we tend to fire and say they’re bad clients.
Kristy: Right, right. And also I was thinking, you know, in terms of number, number of recommendations that they implement, but what’s important for the client to implement. You might have given them 30 recommendations but really only 5 of them were really actually important to the client to make those recommendations, you know, in a certain timeframe. And maybe they were only capable of doing five of them at that point in time because you’re dealing with that emotion piece. You’re dealing with that cognition piece that might be standing in the way of them making all of those 30 recommendations.
Michael: And I’ll give United Capital a shout-out in particular because I know some of the work that they did in the big financial planning process that they standardized in their guidebooks was they actually spend a lot of time just helping clients prioritize like, “Okay, here’s 27 recommendations. I know you’re not going to do all 27 recommendations at once, so let’s just sit down and figure out, like, which 3 or 2 or 1 is the most high priority, and we’ll do that first and get that done. And then we’ll sit back down at the next meeting in one month or three months or six months or whenever it is, and we’ll try to tackle another one.”
And I think we have this tendency from the advisor end that that’s scary. Like, I have to give them all 27 at once because if I only give them a few and then a bad thing happens in 1 of the other 24 that we didn’t talk about then somehow, like, I’ve harmed the client or I’m liable. Or just, you know, I think sometimes it’s even more basic than that. It’s just a like, “I want to show how good my advice is,” right? Like, a good advisor can find 12 things wrong in your life, but a awesome advisor can find 27 things that are wrong in your life improve. Not recognizing that our tendency to do that just overwhelms clients. And if we don’t help them prioritize, they don’t know what to do. Twenty-seven is too overwhelming and then they do nothing.
Kristy: Right. Exactly. Exactly. And it doesn’t mean that you can’t talk about the 27 different things to do, but then giving time to process and identify and prioritizing, like you just mentioned, the one or two things that they can do in a short amount of time, or a specific period of time, depending on what it is. That’s what’s important. Because once they see that they can make those one or two implementations then they’re going to be more likely to keep doing more of them. Like, “Hey, I was able to do this, I can do this. Now I’m going to do another one.”
Michael: Yeah, it’s like how do you eat an elephant one bite at a time? You know, just, if you want clients to be successful implementing your advice, what the research would say is you have to break it down to pieces and let them succeed at a few and then build the self-confidence, the momentum and the rest that lets them actually follow through to the next stage and implement more and build momentum to eventually get all the way through the list.
Kristy: Yeah, exactly. And I think sometimes that actually scares advisors because they think it’s more client time that they have to spend with their clients. And, yeah, it might be, but it actually might be in your best interest and in the client’s best interest because then they’re actually following through with the plan. You’ve taken some more time with them, but in the end, it’s probably worth it.
Michael: I think a good related question is how do you envision us getting paid for this as advisors?
Kristy: Well, I don’t know that, you know, if you’re an advisor and you hold a CFT designation, that doesn’t necessarily mean that you’re getting paid for a different service, but it means that you’re qualified. You’ve demonstrated some ability or skill set that you’ve met the qualifications for this designation, and so you have this added skillset that you can work with a client around this. So with the CFT designation, I’m not sure that, or with the ability to be therapeutic, I’m not for sure that you’re getting paid for a specific service beyond what you’re already doing.
Michael: I guess strictly speaking, if you actually start holding out as giving services in financial therapy, like, some states you probably actually run afoul of laws about being licensed to be a therapist.
Kristy: Yeah. So that’s interesting because therapy itself is not a protected term unless it’s, you know, in an additional or has an additional context to it. Like I’m a physical therapist, I’m a massage therapist. I’m a marriage and family therapist. There’s some places that like to claim that they have, you know, a claim on the word “therapy,” but the word “therapy” itself is not protected. And it’s a state by state issue in terms of what licensures are available, but I can’t go out and call myself a…let’s see, I am not a clinical social worker, I can’t call myself that I do social work therapy because I am not. So I do not have that training, I am not a licensed clinical social worker. Just like my sister, for example, cannot call herself a marriage and family therapist. She may think that she might be a marriage and family therapist, but she is not licensed to practice marriage and family therapy. So just the term “therapy” is not a protected term unless it has additional context to it.
Financial therapy is not a protected term either. Where you, I guess, run some risk is if you’re calling yourself a certified financial therapist but you’re not a certified financial therapist because there’s currently not a certification in financial therapy then that’s a different issue.
Michael: But ultimately, I’m just envisioning from the advisor’s end, like, I know how long it takes me to analyze a plan and provide some recommendations, I don’t know how long it takes me to financial-therapy them through these recommendations over the span of months or years, or however long it’s going to take. Like, I’m just envisioning this takes more time than a 90-minute plan presentation meeting that ends with a list of recommendations and action items.
Kristy: Yeah, yeah. And I think that’s a good question that’s yet to be determined. So right now I think of it as it’s another skill set that you bring to your work with your clients.
Michael: Okay. So, you know, this is a differentiator, like, “Work with us because we’re more effective at helping you actually implement, you know, your financial recommendations.” I mean, I’m sort of imagining it’s a fine line, right? Like, I don’t know if I would actually want to go with the marketing, like, you know, “We’re financial therapists, so, like, we can help you no matter how messed up you are with your money,” right? Like, I’m envisioning a little bit of, if you’re a little too heavy on the financial therapy end, the advisor may or may not like the clients that you attract with that messaging.
Kristy: Right. Exactly. Yeah, you have to think through what it is that you’re really offering, what skill set you actually have that you are utilizing and how that does enhance your financial planning practice. Because you have this skill set, how does that make you different than someone who meets with you for 90 minutes and gives you a list of recommendations?
Michael: Well, and in this world where we’re trying to figure out, like, how will advisors defend their 1% fee on the classic AUM model or all the other ways that we charge over what technology is doing, and, like, well, this is part of the answer. Like, you know, I get it, artificial intelligence is getting better, but I suspect we’re a long way before a computer can give me effective financial therapy.
Kristy: Yes, I think so.
Michael: I’m feeling pretty safe in that prediction, right? Like, analyze your financial situation and figure out whether a 529 plan is best for you, which one you should use, how to allocate it and how much money to put in, like, that’s a math problem. Computers are going to get pretty good at that pretty soon. But, you know, figuring out, like, “How are the two of you going to decide whether you’re sending Johnny to college, paying for it or having him earn his own way, and how are you preparing for that conversation in the future?” Like, okay, that’s a unique value that a computer is not providing and, you know, is a real-world, difficult challenge for a lot of families and a lot of couples. Like, how do I tell my kids that I’m not going to pay for all of college? And it’s not because I don’t love them, it’s because I want them to learn a life lesson. It’s a hard conversation.
Kristy: Yeah. Exactly. Exactly. I was just imagining a robo-advisor doing that, so I got a little chuckle.
How Kristy Got Into This Line Of Work [1:01:04]
Michael: So how did you come to this from your own background? Like, did you come from a background of financial planning and said, “I want to learn more about marriage and family therapy?” Did you come from a world of training to be a marriage and family therapist and then got into that and said like, “Wow, people have a lot of money issues, I think I’m going to focus here?” Like how, did you come to this body of work?
Kristy: Yeah. So I have to go back a little ways if that’s okay. So once upon a time, I was a senior in high school and had no idea what I wanted to be when I grew up. And sat down with my high school counselor and said, “I don’t even really know what I want to major in when I go to college, but I feel like I need to figure that out.” And so she actually went through I remember this big book and had all these different career paths in it and a marriage…we came across marriage and family therapist and I was like, “What is that?” And she read the description and I was like, ‘That’s what I want to be.” And so literally that’s…I wanted to be a marriage and family therapist from that day forward.
So I went to college and knew that if I wanted to be a marriage and family therapist I was going to have to go to grad school. But about my sophomore year, I believe, probably mid-way, maybe beginning of junior year, I was also a business minor. So I grew up on a farm and I knew that regardless of what I did in life, having some sort of business minor would probably be helpful for me at some point. But I found myself really enjoying my accounting classes specifically and I almost…I was thinking about changing my major but because of my farm background I was like, “Okay, if I’m going to change my major, I’m going to do, like, an agriculture-econ/accounting degree, double degree.” And then I figured out how long that was going to take me to graduate, and then I immediately decided I did not want to do that anymore.
So at the same time, though, there was this initiative, and I grew up in Oklahoma, went to college in Oklahoma State, and there was this…the governor had a marriage initiative in Oklahoma because it had the highest divorce rates. And so they were doing a lot of different marital enhancement types of programming. And some speakers came to campus and were talking about how money was a huge contributor to conflict for couples. And I was like, “Oh my gosh, this totally helps me marry my two interests.”
Michael: “I like money stuff and family therapy. It turns out the leading problem with divorce is money.”
Kristy: Right. Exactly. So I was like, “Light bulbs are going off in my head.” Like, “Okay.” So this gave me some direction in terms of what grad schools to apply to. So I looked at grad schools that…because I was going to marriage and family therapy master’s, so I was only going to look at programs that had financial planning programs within the same college or same department. But it narrowed down my options pretty quickly, and I ended up going to K-State because they had the financial planning program as well as a really strong marriage and family therapy program.
And I continued through the Ph.D. program in marriage and family therapy and worked with my major professors. And actually, all my professors were so supportive of being able to integrate the two. They saw the value of the two in terms of how we could really affect change for couples and for families. And so that’s really…sorry, that was a long way around it, but that’s really how I became interested in the topic and kind of went through the training process.
Michael: And then where did the Financial Therapy Association come from? Because I know you were, like, an early board member, a co-founder of getting it going in the first place. So, like, how did Financial Therapy Association come about in this process or journey for you?
Kristy: Sure. So I’ll tell you my recollection and then you might get feedback on how others remember.
Michael: Sure. Fair enough. Everybody remembers the creation stories from their own point of view. I think there are a whole bunch of movies about that. Yes.
Kristy: Right. Exactly. So there were several people here. Okay, so John Grable was here. He was one of my major professors. And then there was some people at Texas Tech. So Dottie Durband at Texas Tech at the time, K-State now, but she was at Texas Tech at the time. And then Sonya Britt, Lutter now, was at Texas Tech as a grad student there. And then there were some different people that we knew across the country: Rick Kahler, Ted Klontz, Eric Dammann. There were just a lot of different people that we knew across the country who were interested and who were doing this kind of work or were dabbling. And I’m sure that I’m…I know that I have not said everyone’s name. So I just want to clarify that I have not said everyone’s name.
And we decided that we would host a meeting in California that was in connection with the Association for Financial Counseling and Planning Education conference because several of us were attending that. So we decided, “Okay, well, let’s host it prior to this conference.” And one of the things that we talked about is, “Is there enough momentum here that we want to formalize something? Do we want to formalize an entity? Do we just want to have kind of a working group? Do we want to have a professional organization or is there just not really any interest in working together to have a common voice?” And so there was definitely debate over the term “financial therapy.”
Michael: I would imagine so. Those things usually get hotly debated at the time.
Kristy: Yes, they were very hotly debated. I mean, even there’s still questions like, “Why is it financial therapy? Why isn’t there a different word? Therapy sound so, you know, medical model, just so far removed from financial planning.” But in the end, you know, we haven’t come up with a better term. And so therapy really encompasses a broad set of skills from a variety of different mental health backgrounds, and so that’s where that’s bringing it in. And we’re really helping to assist people to improve themselves or their families, or to meet their goals. And so we’re assisting them or helping them to do that. And then obviously the term “financial” is pretty self-understood. So bringing those two together. So that was heavily debated.
And so some people walked away from that meeting and we haven’t talked to them since. But there was enough people in that meeting that said yes. “We know other people who are interested in this. We think that we should really create a profession or, you know, start formalizing a field of study. Let’s start with a professional organization that is really kind of spearheading this momentum of creating this field of study.” And so that’s literally the next year we were creating the Financial Therapy Association. Actually just a few months later we were creating but it was in the next year, creating the Financial Therapy Association.
And one of the things that we could all agree on was that we wanted to have relevant research. We wanted to know what the trends and the best ways that we could help our clients do the things that they needed to do, “How can we be most effective with our clients?” And so we felt this need for the Journal of Financial Therapy. So it’s a empirical journal that’s peer-reviewed, that is open access, so anyone can access. And I bring that up because that’s one of the first things that we did as an association was to create the Journal of Financial Therapy right after we were formalized legally as an entity.
And so I think that, you know, that has given us a foundation and a base to help create this field of study in a way to disseminate information to a much broader audience. And so I think that that is also telling of, you know, the kind of work that we’re doing, that we’re not just pulling things out of the sky and making stuff up as we go, we’re really utilizing the research to help inform practice so that practice is also informing the research that’s being done. And the journal is…the articles are empirical, but we do make an effort to make them practitioner-friendly. So you might want to…as a practitioner, you might want to skip the methods or the stats section, but, you know, pay really special attention to the intro and to the discussion at the end where you can pull out really those salient points that are important to you as a practitioner.
Michael: Well, and it’s funny to me how it comes full circle. You know, if you go back and read the book “The History of Financial Planning,” which I highly recommend for anybody who hasn’t actually read it. Denby Brandon and Oliver Welch did it a couple of years ago looking at sort of financial planning all the way back to the early founder days and the original folks who got together in 1969 to get the profession going and the first CFP class in 1973.
And the original proposal was not to call it Certified Financial Planner, it was to call it certified financial counselor. And the original International Association for Financial Planners was going to be the Association of Financial Counseling. And it was I guess just some of the debates at the time about whether to call it planning versus counseling, for which I’m told, I don’t know if this is true, that even then they were actually concerned about, like, being characterized as doing psychotherapy and counseling and that that was not our training because our training was more on the financial side, so they picked “planning” as a word instead of “counseling.” But now here we are 50 years later essentially swinging back to the same thing and the same conversations and the same kind of value proposition discussion.
Kristy: Yeah, that’s very interesting. It’s funny how things come full circle.
Michael: Yes, they do swing around eventually. So, like, who’s involved in the Financial Therapy Association today? Like, who joins? Why do they join? What do you guys do?
Kristy: Yeah. So who joins? Financial planners, financial counselors, financial coaches, mental health therapists. So, you know, thinking social workers, psychologists, marriage and family therapists, professional counselors. So the list is quite broad.
Michael: So you end out multidisciplinary essentially from both the financial planning side of the industry and the therapy side of the industry.
Kristy: Very multidisciplinary. And then even thinking in terms of there’s practitioners and then there’s also academics that join. And so it’s a very diverse group. So we’re all speaking…how I’ve always described is we’re speaking different languages because some are coming from the financial world, some are coming from the mental health world, some are coming from academia, some of them are coming from practice. And so we have all of these different languages. And one of the things that FTA is really trying to do is to, you know, create common language. So what is it that brings us together which is really intersecting behavior, emotion, cognitions, relationships to enhance well-being? And so that’s kind of a very broad definition.
So we’re coming around this goal, this common goal, and creating opportunities for our members to stay connected with the research, to provide educational seminars. And now really the focus of FTA has been to develop the certification so that people can say, “Hey, you know what? I have this specialized skill set that qualifies me to…and I can say because I’ve met some standards that I’m therapeutic, but I’m also ethical in how I’m going about doing that.” So those are some of the things as an association that we’re doing, that we’re trying to do for our members.
Michael: I was going to say, and advisors who are interested, like, you pay a couple hundred dollars a year and join as with other associations out there, similar structure?
Kristy: Exactly. So, yeah, there’s a membership fee, and, yeah, so then you become a member. And we love to have people who are willing to volunteer their time. There’s a lot of volunteer time that goes into…has gone into the development of everything that has come out of FTA. These aren’t paid people. People are not getting paid extra to do these kinds of things. This is a passion.
Michael: That’s what it takes to build an organization, build an association.
What Kristy Envisions For The Future Of Financial Planning and Financial Therapy [1:15:15]
Michael: So where do you ultimately see this evolving? Like, is financial therapy an extension of financial planning? Is financial therapy an extension of marriage and family therapy? Do you envision this ultimately becoming its own discipline and profession that’s separate from any of the others? Like, how do you see this playing out over time?
Kristy: That’s a really good question. I think I see this as becoming its own profession, but I don’t see how you can disconnect them completely if that makes sense. Because you’re really building from financial services, from financial planning and financial counseling, especially, and building from psychology, marriage and family therapy, and social work. And to just kind of utilize those specific professions, those are all…can be considered different types of professionals who have different goals in how they work with clients. And so financial therapy is bringing some of those things together but in a different way. So you’re not just a social worker, you’re a social worker who has the ability to work with financial issues, to apply your social work skill set, but you also have knowledge of some psychological and marriage and family therapy background that you can also implement as well. So I don’t think that we can probably completely separate ourselves from any of those, but I think we’re melding them together to create something new. So I think it’s more of an evolution.
Michael: Okay. So you end out with some, I guess, just distinct but complementary discipline?
Michael: I mean, I guess I’m just trying to figure out, like, so in today’s world, if you come to me for financial advice, I give you financial advice, and if you need therapy I send you to a therapist. Like, they are two different people living in two different disciplines. You hire them separately, you engage them separately. Like, they are independent. So in this financial therapy-oriented world in the future, do you envision, like, eventually financial therapy curriculum just becomes part of the financial planner curriculum and this becomes a baseline competency to be a financial advisor, or do you still envision, like, a separate group of family therapists that or financial therapists that advisors may refer out to when they’ve got, like, particularly messy or challenging situations?
Kristy: I think I foresee it in the future as something that there’s a…you can go to a financial therapy master’s program. Of course, we’re looking way out in the future. And I see that it does become something separate, but also making that comment, “I’m in a financial planning program that offers a graduate certificate in financial therapy.” So there’s already a curriculum there, an educational curriculum there to kind of set that precedence. And we’re not the only university that offers a curriculum in financial therapy. We’re the only ones that call it financial therapy. But then you have Creighton who offers a financial psychology, you have Golden Gate who’s offering a similar kind of program. So we see more and more of some of these programs that are distinguishing themselves. Not just financial planning but it’s something different.
And so I would see this as an evolution that we’re going to have master’s program, so professional programs, not just a graduate certificate, which says you have a specialized skill or a specialized set of knowledge as part of your education, but now you have professional training, you have graduate-level professional training in financial therapy. And the reason that I think that it will be distinct is because I don’t think that everyone is going to want to be a financial therapist. There are people that are going to want to be a marriage and family therapist only and there are going to be people who want to be a financial planner only and that they don’t necessarily want that cross-training.
Michael: So in that world, like, the CFT or a full master’s program in financial therapy kind of becomes a post-CFP, like, specialization or extension? You know, if I get my CFP marks and I want to go deeper in investments I go get CIMA and my CFA. And if I want to go deeper in insurance I get my CLU. And if I want to go deeper in financial therapy I get my CFT.
Kristy: Yeah. But even more so than that in thinking about educational programs, if you want to be a financial therapist and you don’t necessarily need a financial planning program or a marriage and family therapy program, you have a financial therapy program to go to. And this is in the future.
Michael: So you don’t necessarily see this as a baseline to the financial advisor education, more of an extension for people who want to start specializing in this direction. I guess that’s just part of keeping it separate.
Kristy: Yeah. I think right now that’s how it is, is that it’s…because we have to start somewhere. So now it’s, you know, an extension of our financial therapy program, graduate certificate is part of our financial planning program. So as a master’s student, you can get a graduate certificate in financial planning and you can get a graduate certificate in financial therapy. You combine the two together you end up with a master’s degree, but it’s a master’s degree in financial planning. So someday, I see that we have a master’s degree in financial therapy that would look different than our master’s degree in financial planning.
Michael: And ultimately, the line of where does advisor or even financial therapist and sort of the formal licensed practice of therapy and psychology is essentially, like, when I get to real disorders? Like, how do I draw this line? Like, you know, “My clients have a little bit of money problems but they’re not that messed up. So it’s okay I don’t have to get license as a…with the state for practicing mental health.” Like, where do we draw that line so we don’t get in trouble if we start going down this road?
Kristy: Yeah. So that’s a really good question. So, you know, now, if you recognize, “Okay, this person is feeling, you know, sad and blue or they’re calling me three times a day, maybe there is some sort of mental health disorder that’s happening there.” And so recognizing that and then making that recommendation that, “Hey, you know what? We all have different challenges at times.” When you see those red flags or you see behavior that you are uncomfortable with dealing with, you are probably beyond your scope of practice and it’s time to make a referral by offering resources that could be helpful for the client. “Hey, I notice that, you know, you’ve said that you’re not sleeping very well and you haven’t been sleeping very well for the past three months, or that, you know, you’re having trouble, you know, leaving your house. And that just seems unusual to you, or that’s not, you know, something that you normally do. I’m wondering if you’ve thought about maybe talking with someone that can help you with those kinds of things.”
And so sometimes as a planner, you might actually be the first person who sees some mental health disorder symptoms because you might be…because you probably are a trusted advisor, someone that your client feels comfortable talking to and sharing about their family, about what’s going on with them individually. And so you really may be that first point of contact that you are observing behavior that is uncharacteristic for the client, just kind of off or that is you know immediately this is beyond what you’re able to deal with. And so when you start feeling uncomfortable, you have gone beyond your scope of practice, is what we call it, and it’s time to make that referral.
Michael: Is this ultimately something you envision incorporating into the curriculum itself for like, “How to identify things that are beyond your scope of practice that you need to not be doing yourself?”
Kristy: Yeah. So one of the things FTA is working on now is looking at some of the…some assessments that help you identify, you know, what you’re able to deal with or what a client is presenting and if they are a candidate for the types of services that you provide. So helping people be able to distinguish some of that behavior. And then we also have, you know, standards of practice that are available and that, of course, as any young association that’s, or any association really, adapting and revising the standards of practice so that we are working in the best interest of our clients as well.
Michael: What comes next for you personally? Like, what sort of research work are you doing in this space?
Kristy: So some of the things that I have really been interested in is, you know, behavior change and couples and money types of topics. So one of the areas that I am very much interested in is, how do clients change in a financial setting, and how do we help them change? And so some of the work that I’ve been doing is with…I’ve mentioned solution-focused therapy earlier. So how can we utilize a solution-focused approach in helping clients achieve successful outcomes? And so it’s looking at outcome research. So you have pretest and you have a posttest, and do those change? And some of the preliminary work we have done has said yes, it does work, or that it appears to be working.
So what I would really like to do moving forward is actually do that on a larger scale. And we’ve been doing it more with our clinic here at K-State where clients come in. It’s kind of more of an experimental clinical setting. So taking that and utilizing it in the real world so that we can better understand, at least from that aspect. So that’s one of my interests. I’ve been doing some work with Money Habitudes. Some people may be familiar with that.
Michael: These are called Money Habitudes?
Kristy: Money Habitudes, yeah. So combining habits and attitudes together to create habitudes. But it is actually a card game that was developed by Syble Solomon, who is a financial counselor, a financial coach, she’s a financial coach. And she created this card game to basically help people understand their own relationship with money better. And so we have just finished collecting some data, I can’t even tell you the results of it yet, collecting some data to help us look at the online version of, “Do clients implement any change as a result of participating in this online card game?”
And I say card game, yes, card game, like, think solitaire, but you basically have these different attitudes like, “I like to spend on…we’re buying…” this is not an actual one. I’m giving you just an example because none of them are coming to my mind right now. “I like to buy coffee because it makes me feel good.” And then you would say, “This is me. This is not me. This is sometimes me.” And so it’s different things like that that help somebody identify, you know, do they like to spend more? Are they more of a saver? Really, does money make them feel secure? So identifying their relationship with money.
Anyhow. So we’re looking at, you know, is this helpful, and could this be a tool that could be utilized in and of itself? It’s mostly used with counselors or financial educators, and then there’s some sort of, you know, programming or additional counseling that goes along with it. But we’re just starting with this aspect of it. So again, it goes along with that. I bring it up because it goes along with that client change piece. What are some of the things that we can do to change?
Michael: And so are there…I’m just curious, like, what else are you finding in terms of what actually helps clients create behavior change versus the stuff we do as advisors that maybe is not so helpful because we didn’t even realize it because we don’t get trained in this stuff?
Kristy: Yeah. Yeah. So I’ll speak from that more from the solution-focused standpoint. And we haven’t looked at specific intervention. So what we have done is developed a very brief version of the solution-focused model where we’re really just meeting with clients one time. And it’s a goal-setting session. That is the point of this session is to help clients set goals. But what they’re doing is that they’re leaving really feeling more satisfied with their situation than when they came in. They’re feeling less anxious about their situation. And they’re more likely to refer a friend to a planner based on the session, which is actually really interesting.
But I think some of that is because the way it’s set up is, you know, you’re looking at, “What are your best hopes?” And you’re breaking it down. You’re doing some scaling questions, which is a specific intervention from solution focus. You’re identifying some small steps that they can take in the next weeks. You’re looking very short-term. So what can you do today, what can you do tomorrow or this week depends upon the situation and what’s actually realistic and the terms of that time frame. But, “What basically can you do immediately to help you work towards this goal?” And it’s a lot of paraphrasing and listening to that client and giving what you heard as the advisor back to the client so they can say, “Yeah, you know what? You heard. Those are my three goals that I am.” “Thank you for articulating those. Okay, so now let’s think about what’s one thing that you can do this week that helps you move towards that.”
And so I think it’s the breakdown of giving them something tangible that they feel like they can actually do, that they have come up with them themselves. I really think it goes back to having that control of, “What works best for me as a client, and what can I do, and how can I implement that the best?”
Michael: But it’s also just built around this, like, eat an elephant one bite at a time, right? Like, just that we’re trying to get some small wins, some success, something that the client does successfully, and then we’ll build on it.
Kristy: Right. Exactly. And so we don’t have any follow-up to know actually if they did it or not, we just have the pre-session, post-session. And it just happens to be the nature of the project. So I would love to be able to look at that in more time period. So, you know, “Let’s look at a three-month follow-up and see what has changed and what has not changed in a real-world setting.” So those are some of the things that I am really hoping to do in the future.
Michael: It strikes me that that whole…I mean, again, kind of getting back to the gaps between what we do and what these lines of research suggests, like, to me, part of what you’re saying essentially is the whole comprehensive financial planning approach is problematic because, like, it’s too much for them doing it modularly so that they can get like, you know, “What’s the one thing you want to work on? Great. Like, you’re stressed about how you’re sending Johnny to college. Great, we’re going to just do that. And we’re going to focus on that, and we’re going to get that done. And if that goes well, next time you come in, we’ll talk about what you want to work on next, and we’ll do the next thing.”
And, like, it’s the antithesis of doing a comprehensive financial plan, which is all the like, “Give me all the data about everything, all the goals, all be everything, and I’m going to produce the whole financial plan for you all at once.” I think it just strikes me, it feels like what you’re saying is essentially the direction of financial therapy is, “Don’t do that. Do it modularly. Break it up into pieces instead.”
Kristy: That’s just actually my approach. However, I don’t think of comprehensive planning as being a bad thing because I think of comprehensive planning as being something that’s very integrated and that you don’t have a very good understanding of one piece of the plan without understanding the other pieces of the plan. And so maybe that’s really important for you as a financial advisor to know so that you can make those recommendations, but it’s allowing the client to identify what they think is the most important. And maybe it’s not even what’s the most important but what do they feel like they can do right now in terms of those recommendations? What can they actually implement now?
Michael: So less about don’t do the plan comprehensively, but just don’t dump all the recommendations and action items comprehensively. Help people figure out how they’re breaking that down to say, “Which one do you want to do now?” Or, “Which few do you want to do now?” But we have to look at it comprehensively because that’s how we figure out how the parts work together.
Kristy: Right, exactly. Yes. Yes.
Michael: So I was going to ask, like, where does this go for you from here? Like, are you more immersed into teaching? Into research? Into financial therapy? Or are you, like, envisioning going out and starting your own financial therapy firm one day? Like, where’s the future direction for you?
Kristy: Sure. So I’ve actually been the program director at K-State for the past few years, and I’ve loved doing that. So I’ve spent a lot more of my time doing administrative work than I have with research or teaching.
Michael: That’s what happens when you move up to management and administrative work. Yes.
Kristy: Yeah, yeah, that’s what happens. So actually, I’m making a change and will be moving to the University of Georgia, where I will be doing more research and more teaching in this area with the hopes that we can develop the financial therapy aspect of their program as well. And so what’s exciting to see, in my opinion, is that there’s different universities who are recognizing, because of what they’re hearing from their students, from their alums, that this is something that’s important and wanting to develop programs, or at least develop aspects of their programs that can give their students and their graduates an added layer, an added skill set, and maybe even someday a degree in financial therapy.
Michael: Interesting. Well, congratulations on the move over to UGA. I know they have an active financial planning program already. So I guess going back to our earlier discussion, like, this will…you’re not making a new financial therapy, like, department, you’re going to be doing financial therapy work under their financial planning umbrella with, I guess, the hopes eventually of having a distinct degree or a separate certification or something that connotes the financial therapy courses separate from just the core financial planning part?
Kristy: Yeah. So I don’t think we know exactly how that’s going to look.
Michael: That’s the exciting part about being in the early stages.
Kristy: Yeah. So that’s the exciting part. But they have the ASPIRE Clinic, which is a clinic that actually is a very integrated clinic that utilizes marriage and family therapy, nutrition counseling. The law department comes over and does some integrated services with financial planning. And so it is a clinic where the community is able to come in. It’s a training facility for students to gain that practical experience in those different areas. And so the idea behind the ASPIRE Clinic is really to bring this human ecological systems theory approach, where we’re bringing in these different aspects of people’s lives. And if you think about comprehensive financial planning because you have all of these different pieces of a financial plan, like insurance and tax and investments, you have to kind of know how all of those work together. If you think about a person’s life, they have all of these different aspects of their life, and so integrating those pieces together.
And so they currently do some financial therapy work where they’re bridging the marriage and family therapy training and the financial planning training together. They have a practicum for students where they’re actually going into the clinic, doing some of that kind of work. So there’s some basis and foundation set for further development around that. And we’ll see where the future leads. I’m not quite sure.
Michael: Well, it’s a fascinating thing just to have programs like that emerging, where financial planning students can go through and get experience through the ASPIRE Clinic, actually talking to people about their money challenges and, you know, maybe applying some of their financial therapy framework as they learn it and it gets integrated into the curriculum.
You know, in this world where there’s still a lot of complaints or criticisms from firm owners that students come out with, like, a lot of good book knowledge that’s really important but very little actual experience talking to clients and sitting across from them, like, I’m fascinated by these programs. You know, ASPIRE Clinic UGA. I know Texas Tech has the Red to Black program. Like, there’s a few financial planning programs like this that give students a much more hands-on level of experience. Maybe not quite the kinds of clients some of us work in the financial advisor realm, which is a little bit more affluence on average, but still, like, real-world experience sitting across from people and talking to them about these issues.
Kristy: Yeah. I know for our students here at K-State, you know, having the opportunity to work at Powercat Financial, which is a peer financial counseling center, so it’s students working with other students on financial issues, that has been…I mean, that is huge on their resume and for future employers because they’ve actually sat across with somebody else and had a conversation. You know, it might not be the same kinds of issues that you’re dealing with in a financial planning firm, however, those dynamics and knowing how to talk to someone and kind of just a flow of a conversation, that’s huge. That’s so huge.
How Kristy Defines Success [1:39:51]
Michael: So as we come to the end here, this is a podcast about success, and one of the themes that always comes up is that, just, like, what drives us and motivates us toward success is different for different people, sometimes different for ourselves at different stages in our lives. And so, you know, for all the work that you’re doing and building towards and, you know, having gotten Financial Therapy Association off the ground and now building a new program around this at UGA, I am just curious, like, as you look at this for your own life, how do you define success for yourself?
Kristy: At the end of the day, it’s important to me that I know that I’ve done the best that I can do. And one of the reasons that I got into this profession once upon a time, long time ago when I was in high school, I made that decision, “Hey, I want to be a marriage and family therapist,” one of the questions my counselor asked me is, “What do you like to do? What are your interests?” And I said, “I like to help people.” Because one of the things I really enjoyed doing was just doing different volunteer activities in youth organizations. And I think that’s my driving motivation is, can I help someone, whether it’s an advisor or a client? And maybe I will never see the direct effects of the work that I’m doing, but is the work that I am doing impactful and helping change and better and improve someone’s life? So in the end, am I still helping someone?
Michael: Well, amen. Thank you. And hope you’ve inspired a few people listening to this to maybe help themselves, help their clients a little bit differently. You know, again, I’m fascinated how these things just come in circles, right? We were almost certified financial counselors but became financial planners instead. You know, I started in a psychology world and then came here to financial planning and now we’re all looping back again. You know, I think there’s a lot of opportunity for what you’re doing in the world of financial therapy to, like, actually give us a formal discipline and study and research and empirical knowledge about how this works to do it well.
You know, it still amazes me, we’re spending so much time now talking about the future of the value of financial planning is behavior change and nobody actually teaches us how to help clients change their behavior. They just teach us how to make the recommendations and assume the clients will take them. And so I think there’s a lot of opportunity you continue to have to help people, to help advisors with the work that you’re doing. And I’m very excited to see the Certified Financial Therapist designation coming out as well. I think that’ll be popular, is my guess, as we’re all.
Kristy: We hope so. We think so.
Michael: Yeah. Well, thank you so much for joining us here on the “Financial Advisor Success” podcast.
Kristy: Yeah, thanks for having me. This has been fun.
Michael: Absolutely. Thank you.