Financial Therapy Is a Real Thing. Do You Need It?

Financial therapy can help you address emotional blockers to financial well-being. But it's still an emerging industry without regulation, and might be pricey.

When I worked as a financial planner, I learned that there is more to managing personal finances than meets the eye. When clients opened up about their financial situations, other stuff about their lives ended up coming out too.

I vividly remember one client stopped mid-sentence and looked at me, astonished, and said “I tell you more about myself than even my wife knows!”

I often joked that I was not just a financial planner; I was part therapist as well. It turns out I wasn’t entirely wrong, and since my financial planning days, financial therapy has gained momentum as a modality of therapy.

What is a financial therapist?

While a financial planner or financial advisor may help you create a budget, a financial therapist can help you find out what’s getting in the way of you sticking to it.

Financial therapy deals with our emotional and psychological relationship with money. Talking with a financial therapist can be useful for people facing obstacles to financial well-being that they can’t quite understand or overcome on their own.

According to a 2019 survey by the Financial Consumer Agency of Canada, financial well-being isn’t just about a healthy balance sheet. It is determined by several factors, including:

Financial behaviours, like saving money and borrowing.
Social factors, like age and financial support system.
Psychological factors, like financial confidence and self-control.
Economic factors, like income and education.
Financial knowledge, like money management skills and experience with financial products.

The survey also found a significant association between a person’s financial well-being and behavioural and psychological factors, suggesting that changes to income and status aren’t the only ways to improve one’s financial situation.

Enter the financial therapist: Someone who is uniquely positioned to help you dig below the surface, improve your relationship with money and perhaps your financial health as well.

How financial therapy works

At the moment, financial therapy is still an emerging concept, so the types of professionals who can hang out a shingle as a financial therapist varies.

The Financial Therapy Association, or FTA, a US-based organization with international membership, works to advance the field of financial therapy. One way it does this is by offering a Certified Financial Therapist (CFT-I) designation to professionals in both the personal finance and mental health industries.

To be certified, individuals must demonstrate certain levels of education and experience in therapy, financial planning and financial counselling, but are not required to be licensed therapists or mental health professionals.

That said, while somebody with an FTA certification may not be able to provide traditional therapy, they will understand how emotions are tied to money and can advise clients accordingly.

How to know if you need a financial therapist

When I was a financial planner, I saw clients who would unwittingly sabotage their own finances.

For example, in an effort to get out of debt, a client would create a budget so stringent it was unrealistic, and when they inevitably failed at sticking to it, this sense of failure would send them to the opposite extreme of going on a spending spree that would undo all the hard work they’d done. The cycle could beget itself and continue for years.

This is the kind of behaviour a financial therapist may be able to shed light on.

You don’t need to be under severe financial stress or experience financial trauma to benefit from financial therapy. If you feel overwhelmed, confused or held back money matters, a financial therapist may be able to help.

Indicators that a financial therapist could be helpful

You hide purchases from your spouse or family.
You spend money compulsively.
You were subjected to money conflicts in childhood.
You have obsessive or post-traumatic disorders that are impacting your finances.
You struggle with feelings of guilt about money.
You can’t keep tabs on your cash.
You fight about money with your spouse and/or other family members.
You have a gambling addiction.
You feel like you don’t deserve money or financial well-being.
You would like to improve your money habits.
You feel unending stress about money, even when bills are paid.

How to find a certified financial therapist in Canada

Because financial therapy remains unregulated, it’s very important that you be clear about what you’re looking for in a financial therapist so you can find somebody who is educated and equipped to deal with your situation.

FTA has Standards of Practice and a Code of Ethics that members to which members are supposed to adhere, but they may also help you understand the general professional responsibilities of any financial therapist.

Simply entering “financial therapist near me” into your favorite search engine will get you started, but you can also search the FTA directory for a financial therapist. Be aware that not everyone listed holds a financial therapy designation, so it’s important you do independent research as well.

In addition to the CFT-I designation that the FTA issues (which generally requires a Bachelor’s Degree as a minimum prerequisite), there are a few other designations you can look for, while seeking out a financial therapist, including:

Behavioral Finance Advisor (BFA)

Offered by a Minnesota-based consulting services company, the BFA designation requires two courses in behavioural finances and an exam. Many people who pursue this designation are financial advisors who want to marry their financial expertise with elements of psychology and neuroscience so they can help their clients make better decisions.

Accredited Behavioral Finance Professional (ABFP)

Offered by Wisconsin-based Kaplan Financial Education, ABFP is a university/college designation for mid-career and advanced financial professionals indicates a thorough understanding of psychology as it pertains to economic behaviour.

Certified Financial Behavior Specialist (FBS)

Offered by the Tennessee-based Financial Psychology Institute, FBS is an additional certification for financial and mental health professionals. Requirements include a foundational education such as a Bachelor’s Degree or certification in financial planning, coaching or mental health, completion of the Certificate in Financial Psychology & Behavioral Finance, continuing education in financial planning, letters of recommendation, and agreement to the FPI’s Code of Ethics. An international directory of people who hold FBS certification is available on the FPI website.