Business owners are faced with tough decisions every day that challenge them to run their businesses efficiently and to keep their employees happy. Yet, when it comes to decisions about asking for help, many often experience feelings of guilt and shame. And in the current pandemic environment, with recent government programs like PPP loans available to business owners who are facing financial strain, individuals who feel compelled to apply for these loans may be asking themselves, “Why couldn’t I have managed things more carefully?” or “Have I failed my family/employees because I did not manage the business better?” Accordingly, it is not surprising that financial advisors may find an increasing number of business owner clients suffering from these difficult emotions.
To understand the reason for the shame and guilt that business owner clients (and even financial advisors themselves, who have, in many cases, needed to utilize PPP loans) experience, it is first important to understand that there is a clear distinction between greed (that is often ascribed to PPP recipients) and subjective financial strain. As while the news media has been quick to name greed as a motivator for many business owners who applied for PPP loans, the reality is that greed (which is actually a pathology where an individual has a selfish desire to obtain more than what may actually be needed) is rarely the reason people apply for such support. Instead, subjective financial strain is more often the driving factor that determines when someone may reach out for financial help (including via government assistance programs). By contrast to greed, subjective financial strain is about how a business owner perceives the intensity of the threat facing their business; its subjective nature is influenced by the owner’s own confidence level in managing their business operations during stressful times (which can feel serious, even if ‘objectively’ the business is not necessarily in dire straits, or at least not yet). Nevertheless, a common reason for both shame and guilt associated with asking for financial support is because of the erroneous association with greed.
For financial advisors with business owner clients dealing with these difficult emotions, knowing that shame and guilt have distinct characteristics, and realizing the difference between them, can be key in helping clients cope through difficult times. Shame is an emotion borne out of the belief that one’s own character is somehow deeply flawed, where the individual feels that they are unworthy of acceptance, belonging, or love. When someone feels ashamed, they tend to use language that suggests they somehow feel they are failures or that their character is somehow insufficient. They may say that they aren’t deserving or worthy of merit. Guilt, on the other hand, is an emotion based on remorse; it usually results from an action or decision that is in conflict with one’s personal values. The language used by someone feeling guilt will focus more on an action (or inaction) and could hint that a particular decision was a bad choice. A person experiencing guilt generally doesn’t view themselves as being flawed; instead, they are more likely to express remorse or doubt over some action that was carried out in recognizing that it may not have been consistent with their values (or at least with the values they aspire to represent).
For advisors who want to help clients deal with these difficult emotions arising from such difficult financial decisions, it’s first important to identify the specific emotion being experienced. For clients who are suffering from feelings of shame, the advisor can help the client view the bigger picture and to find ways to reassure the individual that they are indeed worthy, looking to past business decisions or other aspects of their life to support this. For clients with feelings of guilt, advisors can support their client by finding ways to help them ‘right’ the wrong – whether that means reversing the action (e.g., returning loan proceeds taken if they turned out not to be needed, or helping a client apply for a loan if the guilt was because of not applying for a loan), or mitigating the effects of the decision (e.g., making a donation to a worthy cause to absolve their guilt for having otherwise taken the PPP dollars).
Ultimately, the key point is that feelings of guilt and shame are very common when difficult financial decisions are involved. In the case of taking PPP loans, the problem has been particularly acute, because the requirements to qualify for PPP loans were based on subjective financial strain (stipulating that ‘current economic uncertainty made the loan necessary’) and not necessarily objective financial strain (e.g., the business must have experienced a 50% decline in revenue to qualify). Given the subjective financial strain requirement – and the fact that subjectivity is, by definition, in the eye of the beholder – the media has associated greed with PPP loans and their forgiveness provision… resulting in many individuals who have taken PPP loans now experiencing guilt and shame. (And notably, recent proposals for a new round of PPP dollars would specifically shift from a subjective to more objective financial strain requirement going forward.) Accordingly, advisors can support their business owner clients who did pursue PPP dollars by helping them understand that the PPP funds were there specifically to be used to respond to subjective financial strain – they were established to help individuals maintain their business operations during these times of economic uncertainty. Moreover, advisors who express empathy and compassion, instead of sympathy and pity, can most effectively help their clients cope with their feelings, so that they may get back to business as usual as quickly as possible!
When the pandemic subsides (and likely even before it does), I am going to guess that advisors, maybe especially those with small business clients, are going to see a lot of clients (and even advisors themselves!) struggle with both shame and guilt.
Even long before the pandemic, researchers have made it clear that shame and guilt around money were commonplace, but given the recent decisions that clients and advisors may have had to make during this time to stay afloat, including and especially when it comes to various government programs to support small business owners, there will likely be some additional emotional fallout. With some suggestions from this article, advisors will be able to recognize these emotions (and help clients to recognize them as well), deal with them, and move forward.
Shame And Guilt Are Distinct, Self-Conscious Emotions That Are Internalized Differently
From the research of Brené Brown, the now very famous shame researcher, we know that shame is a feeling of unworthiness. In personal relationships, this may be experienced as having feelings of being unworthy of love and belonging. In professional relationships, this might be closer to feeling a lack of acceptance, understanding, or empathy. Thus, it may be of no surprise that Dr. Brown describes this emotion as "not helpful or productive".
Feelings of shame can also intensify, as shame grows, according to the research, when it is kept secret, treated with silence, and/or judged by others, which can lead to feelings of isolation and experiencing deep pain.
Example 1: Toni, a dermatologist with her own practice, had to request Paycheck Protection Program (PPP) funds from the Small Business Administration to keep her practice afloat during the pandemic.
She feels sick about it, and fears that if her clients knew, they would think less of her too – she questions herself, “How could I, a doctor, not have enough sense/money to keep my practice open?”
She also fears her clients will think or say, “Why couldn’t a doctor (who ostensibly makes a ton of money) just forego her paycheck to keep her office open?”
However, Toni knows margins are tight and that the situation is not that simple. Toni is ashamed that she used the PPP loan, even though she needed it, and has not told anyone about having used it because she fears judgment.
Shame is internalized as the idea that “I am bad”. Toni, in Example 1 above, questions herself (is she a bad business owner for having taken the PPP loan?), and worries that clients will also judge her for not managing her money or for being ‘greedy’ by not forsaking her own paycheck.
Guilt is the psychological discomfort we feel when our actions are misaligned with our values. For instance, perhaps your clients know it is good to pay off their credit card each month and, in regular times, do so without issue. Yet, lately, because of the pandemic, they are feeling guilty about their credit behavior. Toni knows that it is important to save and live within her means – especially at her above-average salary – and feels guilty about still not having enough and needing to rely on a PPP loan.
For some clients, guilt might stem from having taken action that may be out of character (I put too much on my credit card during the pandemic and realize I should have had more in emergency savings). And for other clients, guilt might arise due to failing to take action (I did not pay off my credit card balance this month because cash is tight given the fixed expenses I took on in the past).
Feelings of guilt are similar to feelings of sadness, but they are distinctly different from the feelings of unworthiness associated with shame. Guilt is the recognition that there were (or are) two paths to choose from, and perhaps the choice we made was the wrong one, and that next time perhaps we should and will choose a different path.
Relatedly then, it is no surprise that Brené Brown describes guilt as having the potential to be “adaptive and helpful”, even though it can be quite painful.
Example 2: Luke, a lawyer, found his small practice at a standstill when the courts closed. Luke was frustrated and a bit unsettled with the situation he was in, and so the day the PPP loan was offered, he signed up.
However, after just a few weeks, his state re-opened the courts via Zoom and telephone. The firm was able to return to work, although it did so, still slowly but quickly enough for Luke to get back on track without too much trouble.
After the fact, and based on how it all turned out, Luke knows that he didn’t actually need the PPP loan, and now he feels guilty about having taken it.
Guilt is internalized as the idea that “I did something bad”, as contrasted with shame, which is internalized as the idea that “I am not worthy”. In Example 2, Luke believed he had made the wrong decision to take the PPP loan and regretted his choice. However, he did not question who he was and did not feel as if, somehow, his decision was an indication of a flawed character. But he does feel an internal conflict between his values and his actions.
The pandemic has brought to the table challenging questions and has forced many of us to make difficult decisions that have not only interrupted the way we live but also has affected the way we see ourselves and our actions. Accordingly, shame and guilt will both be much more common through these times.
For instance, people who may not normally have financial trouble or who we would generally not imagine having financial trouble (e.g., doctors and lawyers) have faced choices and decisions that they have made that they are not necessarily proud of, in an effort to make ends meet or keep their business afloat and protect all of their employees or family. And, as a result, they may now be experiencing shame (“I try to be financially responsible, but I didn’t manage to keep the business healthy enough to weather this setback”), or guilt (“perhaps I shouldn’t have taken the loan – in retrospect, maybe I could have tightened my belt enough to weather the storm after all”).
There is even a specific type of guilt, survivor guilt, usually linked to servicemembers or individuals who survive horrific events, in which individuals feel guilty that they were spared from demise when so many other people were not. Now, certainly, one could argue (and I would) that individuals who survive horrific events are not just choosing from two scenarios and feel bad about the road not taken. Yet, they, the survivors, do still feel that psychological discomfort in that there was a different path – even if that path also means something worse for them.
Moreover, there may be business owners or other individuals who have fared these past months a bit better (or at least not as bad) as those around them, and actually feel guilty that they are doing okay! They see the destruction around them and feel bad (and maybe at the same time lucky) that they are not as affected by the situation as others. And if they took a PPP loan or utilized some other type of government assistance while it was still available, like the disaster loan, they may even now feel guilt that their business is actually doing well.
The Difference Between Greed And Subjective Financial Strain
Gordon Gekko, the psychopathic corporate raider portrayed by Academy Award-winning Michael Douglas in the 1987 movie “Wall Street”, advocated the virtue of greed in his famous quote, “Greed, for lack of a better word, is good. Greed is right.”
Even as much as the news sensationalizes PPP decisions in the context of greed - owners of often substantive business enterprises who are ostensibly already very affluent even as they request government support – the reality is that there’s little evidence that such decisions are being made from the perspective of ‘greed’ and personal enrichment (even, or especially, at the cost of harming others in the process). In fact, while many throw the word 'greed' around, greediness in its true sense is actually not very commonplace, because greed (at least in the plotting evil sense of enriching oneself at the cost of others, as it is often sensationalized) is a pathology. But most people weren’t using the economic downturn to buy up all of the hand sanitizers that you could find only to re-sell it at a 400% mark-up; true greed simply isn’t the motivating driver for most.
Instead, it appears that the most common reason for seemingly affluent individuals or businesses taking PPP dollars is actually the opposite; not out of a desire for greed and personal enrichment, but a feeling that, at least from their perspective, they are (at least subjectively) under a significant financial strain.
Objective financial strain is an absolute or at-the-margins measure of a person’s financial ability to make ends meet. It is someone who is unable to feed their family and, at the same time, keep their lights on. For a business owner, this may be a case of keeping the business going and not being able to keep all of their staff employed. Objective financial strain is that place where a person is truly caught between a rock and a hard place, and the decisions that must be made often come in the form of two, less-than-desirable options.
Financial advisors most commonly see objective financial strain (for clients or even for themselves) not in such absolute terms, but at the margins. A business margin takes into account revenue, compensation, and overhead. A household’s margin takes into account income and expenses. And when we’re accustomed to a certain lifestyle or business status, cuts at the margin can still be quite impactful.
Example 3a: Jane and John have a combined monthly income of $40,000 and monthly expenses of $20,000. Two months into the pandemic, however, their income has dropped to $10,000/month, but expenses have remained at $20,000. Jane and John are experiencing objective financial strain.
Example 3b: Small Business ABC has a revenue of $1,000,000. Their direct expenses (compensation paid to professional staff) total $500,000, and overhead (all other expenses) is another $375,000. During the pandemic, the revenue drops by 20%, leaving them with only $800,000 in revenue but $875,000 in expenses. They have no choice but to fire at least one employee to break even.
When margins are unhealthy, even if there is some money in reserves or in an emergency fund, weathering the situation at the margins is really tough and forces those hard decisions that can lend themselves to both guilt and even shame. For instance, no one likes having to tighten an already tight budget, and no one likes having to spend emergency fund dollars. And no one likes having to rely on government assistance, especially when their self-image is that they’re independent and successful.
Subjective financial strain, on the other hand, is a feeling of financial inadequacy and can be thought of as a mix of both financial (dis)satisfaction as well as financial worry. And interestingly, although probably not surprisingly, research finds that subjective financial strain does not perfectly correlate with objective financial strain.
Said another way, different people with the same amount of resources can and do vary in their view of their ability to meet their current financial obligation and their comfort and confidence level with being able to meet their current financial obligations. Where one business owner may feel ‘okay’ and be willing to just ‘tighten the belt’ because they rationalize something like, "I don’t have it as bad as the guy who cannot put food on the table", another may not and isn’t prepared to make potentially drastic cuts to their personal lifestyle just to keep their employees from being forced to make cuts to their own (by being laid off).
Example 4a: John’s business is suffering, but John has a very healthy personal nest egg. John feels comfortable using his personal resources to bankroll his company to keep all of his employees employed. His sense of subjective financial strain is very low, as he’s comfortable and confident that he can rebuild his financial nest egg again in the future, and he does not take out a PPP loan.
Example 4b: Lana’s company is suffering, and she also has a very healthy personal nest egg. However, she is very nervous about her ability to care for her employees and to keep the business going without causing potentially irreparable harm to her own financial future. No one knows how long this will last, and PPP funds are limited. Because of Lana’s discomfort with her ability to cover her business’s income shortfall and anxiety about how long these conditions will last, she has a very high sense of subjective financial strain, and she decides that she will have to lay off employees and then decides to take the PPP loan as an alternative to the layoffs.
Does this make Lana greedy? No! Lana had already made the decision as a business owner that the current situation wasn’t tenable, that under the current subjective financial strain she didn’t want to risk her personal assets for uncertain business recovery, and that her ‘only’ course of action was to lay off employees. Choosing to pursue PPP dollars was, at that point, was simply a decision to spare employee layoffs.
What is more, let’s remember that in each case in Example 4, applying for a PPP loan itself was a subjective decision. After all, to take the PPP loan, the Small Business Administration’s Borrower Application Form simply asked applicants to certify that “Current economic uncertainty makes this loan necessary to support the ongoing operations of the Applicant”. Business owners, with maybe the same objective financial standing, could (and sometimes, did) come to different subjective financial conclusions: fire employees, fire a client or two, try to personally bankroll their firm, or choose the PPP loan route. This means what one person sees as ‘greedy’ may really be another person just reaching their own subjective financial strain threshold.
And notably, such situations appear to have been especially common with the PPP program in particular, because it was structured as a program with a subjective (but not objective) certification of need (unlike the Employee Retention Credit, or ERC, under the CARES Act, which did have an objective financial strain requirement of a significant income drop of 50% or more compared to the same quarter of last year).
The key point, though, is that while we can all agree that someone under objective financial strain clearly isn’t acting out of greed, the decision to pursue PPP dollars in the lack of severe objective strain does not necessarily indicate that greed is at work. It can be (and appears, in fact, to have most often been) a function of subjective financial strain – that not everyone approaches financial risk and uncertainty in the same way, and PPP loans, in particular, were based on subjective financial strain in their required certification to qualify for the loan in the first place.
Asking For Help During The Pandemic Is Leaving Many With Feelings Of Shame Or Guilt – How Advisors Can Help Their Clients Cope
During the pandemic, people who do not normally need help, such as affluent individuals and families – the traditional financial planning client – may have experienced significant subjective financial strain and had to ask for help. Which can be very hard for anyone to do, but especially those who otherwise have been (and felt) financially successful in the past. For instance, a longitudinal study from Sweden found that accepting public assistance benefits were particularly stigmatizing for individuals in higher initial socioeconomic status positions.
What is more, even if clients did not actually take out a PPP loan, they may have still taken financial actions during the pandemic that they are not particularly proud of, even if (again) what they did was legitimate given how they may have felt regarding subjective financial strain.
For instance, studies have shown that people feel guilt and shame for having used emergency funds in emergencies! As while the good news is that the money is there 'for emergencies', the fact that it has to be used is still itself a tough personal acknowledgment that someone’s situation was precarious enough that they ‘got themselves into an emergency’ in the first place. In other words, someone who prides themselves on the financial prowess to manage their household finances well enough to build up an emergency fund may feel shame that they then got themselves into a position where they had to rely on it!
And related to financial shame and feeling bad about it, these situations can lead to a slippery slope involving more difficult decisions. Essentially, once their personal image is tarnished, they had to use that emergency fund; research shows it can be difficult to get one’s self back on track again and even bring about more irregular spending. (As again, unlike guilt that has a level of ‘self-instructive’ to help us change our behaviors in the future, shame, in particular, is more often self-destructive instead.)
Fortunately, this is an area where advisors can help!
Helping Clients Deal With Feelings Of (Financial) Shame
For clients who are experiencing feelings of financial shame, it is important to remember that shame is about the individual believing that they are in some way, bad or unworthy. Accordingly, advisors can help clients feeling shame by encouraging them to expand their narrative to recognize that they are, in fact, not bad or unworthy.
Recall Toni and her dermatology practice from Example 1. Toni believed because she had taken the PPP loan, that she was a bad person. While she truly felt she was a horrible doctor/business owner/person, certainly her advisor knows this is not true, and had witnessed first-hand the years that Toni struggled and worked hard to build her practice, and how her margins were tight precisely because she was so focused on taking care of her patients and paying her employees generously. So the goal when working with Toni is also to help her recognize that about herself as well.
Advisors running into shame cases can meet with their clients and let them know that you, their advisor, see what they had to do to take care of their family/self/business actually reflects that they are a good business professional/provider/person. By taking the PPP loan, they were able to take care of their family/business and avoid what may have otherwise been necessary layoffs to otherwise protect the business… and that was exactly what the PPP loan was designed to help them do!
What is more, advisors may also help the client recall other choices they made that reflected how they were (and still are!) a good business owner and provider. For instance, maybe you know the business owner has a company philanthropy interest or that they have donated time, energy, and money to important causes.
Reminding your client of things that they are proud of can expand their narrative from saying, “I am bad” and show them that decisions that they regret were just choices that didn’t feel entirely in sync with their values (and choices that they can simply approach differently in the future).
Helping Clients Deal With Feelings Of Guilt
Guilt, again, is believing that the action that was performed (or not performed) is bad but not necessarily that they, as an individual, are bad or unworthy for being responsible for the action. The individual who feels guilt, in contrast to feeling shame, has not personally internalized the negative message as a reflection of their character or who they are.
Furthermore, the advisor may be able to help the client who feels guilty with 'righting' the wrong. For instance, if a small business owner feels guilty about taking a PPP loan and it turns out that they were okay and did not really need it – the advisor can suggest that they make a donation of the funds or find a way to put them to good use in the business (or outright pay the funds back as just a PPP loan rather than requesting PPP forgiveness in the first place).
If the client is perhaps suffering because they have not taken the loan and they do need it, help them organize their financial situation, and get a plan of action in place. Remember that guilt can bring about positive transformation when we are clear about what we did (or did not do) and how we want to be different for the better moving forward.
Using Empathy And Sympathy To Help Clients Deal With Shame Or Guilt
Not sure if it is shame or guilt that the client is experiencing? No problem. Empathy and compassion (but not sympathy or pity) are perfectly appropriate responses in each case to ease clients' feelings (and work regardless of which is the core issue).
For instance, in the PPP wake and the fear of disclosure, there has been a lot of judgment against those who have taken loans, and fear of being ‘found out’ by those who did file for PPP loans can lead to isolation and pain. Moreover, even though you and your firm may not have told a single client to avoid taking a PPP (and/or even helped them get one using our PPP page), the news focus on greed has still likely negatively impacted individuals’ self-esteem and self-image.
However, when the issue is that someone at least might be feeling shame – unworthiness and a feeling of being judged (poorly) – for their prior decisions, it’s crucial not to amplify the negative situation. Consequently, addressing a client with sympathy or pity, even though these two responses do recognize pain in another person, do not necessarily make the sufferer, the client, feel better. Instead, it may make them feel even more judged (not good for guilt and shame) and certainly not accepted (not great for the advisor-client relationship).
Example 5a: Toni has come in to meet with her advisor, Scott, and tells Scott about taking the PPP loan. Scott did not know that Toni had taken the loan.
As Toni gets to the end of describing what she has been going through, both financially and emotionally, she looks to Scott of solace. Scott, not entirely sure how to respond, says, “Oh no, Toni, I’m sorry. That must be terrible for you.”
Toni immediately feels she has shared too much, is being judged, and shuts down the conversation with Scott.
Example 5b: Luke has met with his financial advisor, Jamal. Luke discloses that he took the PPP loan and thankfully didn’t need it, but now feels really awful for having it.
As Luke finishes explaining what he has been going through financially and emotionally, he looks to Jamal for guidance. Jamal, not entirely sure how to respond, says, “Yes, this is really hard for everyone.”
Luke feels put off and judged; he was not trying to compare his situation to anyone else, just trying to give Jamal all the facts.
In both cases in Example 5, above, neither advisor meant to damage the advisor-client relationship, but, through pity and sympathy responses, the clients were both offended and sent deeper into isolation. Their advisors’ responses, although well intended, did not recognize a cry for connection.
Consider the following for comparison where Scott and Jamal, the financial advisors, instead respond with empathy and compassion using small, simple changes to what they say and how they react.
Example 6a: Toni has come in to meet with her advisor, Scott, and tells Scott about taking the PPP loan. Scott did not know that Toni had taken it.
As Toni gets to the end of describing what she has been going through both financially and emotionally, she looks to Scott of solace. Scott, not entirely sure how to respond, remembers from a Kitces blog article that it is always okay to thank the client for sharing something personal.
In response, Scott says, “Oh, Toni, thank you for telling me about what has been going on.” Toni immediately feels connected and not judged. She feels that Scott is actually happy that she opened up.
Scott, also feeling a bit more confident because Toni has relaxed and given him a half-smile, says, “I heard you when you expressed that you do not feel good about yourself right now, but I want you to know that I think what you did means you are a good provider and business person – that was what the PPP loan was for and, therefore, you did it.”
Example 6b: Luke has met with his financial advisor, Jamal. Luke discloses that he took the PPP loan and thankfully didn’t need it, but now feels really awful for having it.
As Luke finishes explaining what he has been going through financially and emotionally, he looks to Jamal for guidance.
Jamal, not entirely sure how to respond, but recalling the importance of empathy and connection, says, “I appreciate you sharing with me, Luke, I know it is hard – I too have done things that I am not particularly proud of either during the pandemic.”
Luke feels heard and connected, and so does Jamal. It feels good to express true empathy. Jamal then says, “I’m glad you have come in. I look forward to helping you work through this. We will come up with a plan forward, together.”
In the cases in Example 6 above, Jamal and Scott thanked their client for opening up. These are really, really hard discussions for clients to have, so letting them know that you are glad that they are sharing with you can help to put everyone at ease.
You don’t have to apologize or say how terrible their situation may be. You can just thank them for telling you, and that response, the 'thank you', can never be misinterpreted as pity or sympathy.
Furthermore, once some initial safety was established with their clients, Jamal and Scott were free to paraphrase what their clients just told them in a way that was comfortable for them. Notice that neither Jamal nor Scott went deep using “tell me more” statements; while they could have done those things, they recognized that their clients were emotionally stressed and that calming the clients down a bit by paraphrasing was the best way to move forward, versus getting more clarity and going deeper on what was done and how the client feels about it.
Last but not least, both Jamal and Scott made a connection with the client letting them know they were not alone. They cued the client into the fact that their offices (or Zoom rooms) were judgment-free zones where they could share what happened and what they were feeling. And then Jamal and Scott ensured that their clients knew they were not alone. Shame is isolating, and guilt can be isolating, so making statements to let the client know that you are there for them and that they are not facing these decisions alone is key.
The pandemic has brought out a lot of behavior and emotion that we individually may not feel great about. Yet, we don’t have to live life with shame and guilt.
We all experience financial stress in different ways and, therefore, we should not be quick to label the financial behavior of another person as greedy, selfish, or anything else – because we don’t know what financial strain they may be experiencing in their own lives, whether ‘subjective’ to their point of view (which might be viewed differently by others but is still very real for them), or outright objective financial strain (as we’re not always privy to the financial woes of others, given the taboos of talking about money in the first place!).
Instead, focus on compassion and empathy. We will always be better together, and, through this time, we may even have the opportunity to build stronger relationships through honesty, trust, compassion, and vulnerability.