In partnership with the Financial Therapy Association, the Financial Planning Association® recently introduced a series to help financial planners prepare for working with clients experiencing life-changing situations. The new three-module, self-study online courses focus on common emotional events and share researched therapeutic techniques that financial planners can immediately use in their practices.
The first of the three-part series—Difficult Conversations in Later Life Planning—was relevant to financial planning practitioners as the average age of a wealth management client is 62. In addition, a future orientation is essential to financial planning which will necessitate conversations about later life even with younger clients.
See what you missed in the first installment of this Difficult Conversations Program Series:
Why Is This So Difficult?
Discussions around later life are difficult. Some common reasons include:
- Aversions to discussing money
- Acknowledgement of future death or disability
- Changing sense of identity
- Misalignment between goals and funds available
- Prioritizing immediate needs (e.g., education funding) over future-oriented needs
One of the most daunting reasons behind the increased difficulty in navigating these types of conversations is the concept of the fourth age. The fourth age is when a person becomes increasingly more dependent on others for daily care, usually starting at around age 80 or 85 and continuing until end of life.
The third age—the age after retirement—has become an increased focus as overall health has increased and people look forward to talking about what life will look like when they have more free time on their hands. But the fourth age is marked by health concerns and mortality is often scary for clients to even think about, much less plan for.
Part of the fear for clients is the idea of ambiguous loss—which is when we begin mourning something or someone that is not completely gone. There are two types of ambiguous loss:
- Type 1: a person is physically absent but psychologically present (a child leaving for college)
- Type 2: a person is physically present but psychologically absent (someone suffering from dementia)
While there are many examples of ambiguous loss in financial planning, the majority occurs when talking about the fourth age. This includes ambiguous loss around one’s identity when talking about retirement plans, or around one’s vitality when talking about deteriorating diseases (like MS or Alzheimer’s) and having to plan for long-term care. Financial planning education programs provide incredible training on how to handle the numerical side of planning for later life, but many of us feel inadequately trained in how to handle the human side.
What Can Planners Do?
Mental health theories can be applied to the financial planning process utilizing financial therapy techniques. The first webinar in the series focused on helping financial planners aid families in building resilience in the different stages of ambiguous loss through the use of these techniques.
Here are guidelines for planners to use these techniques in their practices from the webinar:
- Finding meaning. Allow time for your client to tell their story and use reflective listening to elucidate the meaning they are formulating.
- Tempering mastery means helping the family control what they can control and let go of the things they cannot control. Create multiple financial planning scenarios to allow them to feel more in control.
- Reconstruction identity. Planners help reconstruct identities and roles within the family to help the family come to terms with changes that will occur around identity. Focus on how their identity may evolve around the ambiguous loss and use open-ended questions to help them create a new sense of identity.
- Normalizing ambivalence. Families will sometimes experience ambiguous loss, which could make people feel scared, anger, guilt and shame all at once. Explain the concept of ambiguous loss to your client and how multiple conflicting feelings is completely normal to avoid any sense of guilt or shame.
- Revising attachments. Encourage your client to get involved in their community (church, volunteering, etc.) so that they can have the social capital they need to avoid isolation.
- Discovering hope. Instill hope in the family by asking supporting family members about their future dreams and goals beyond caregiving needs.
These guidelines do not need to be utilized sequentially. There are times where you’ll need to circle back. Instilling hope is one of those guidelines that should be at the forefront of financial planners’ minds throughout the planning process.
We all know that financial planning as a profession is evolving to meet our clients’ needs in more than just the numbers. Financial therapy allows us to provide more holistic care to our clients facilitating trust and understanding that fosters the planner/client relationship.
The webinar provided a brief introduction of all of this and more, while also providing wonderful supplemental materials to help financial planners integrate this into their practice, including a video role-play demonstrating how one financial planner does this with her clients.
The webinar recapped here, plus the other two in the series, will be available as an on-demand package later this year. Stay tuned to learning.onefpa.org for more.
Shelitha Smodic, CFP® professional, is a private wealth adviser at Westwood Wealth Management, based in Houston, Texas. Prior to joining Westwood, Smodic worked in supply chain strategy and design for the consumer products industry, including roles at Sysco Corporation, Coca-Cola Refreshments, and The Clorox Company. She earned a bachelor of science in business administration with a dual concentration in supply chain management and international business from The University of Tennessee. She is currently pursuing a master of science in personal financial planning from Kansas State University. She is an active member of the Financial Planning Association of Houston where she serves as the Pro Bono Director.
Megan McCoy, Ph.D., LMFT, is a professor of practice at Kansas State University where she teaches courses for the Financial Therapy Certificate Program. Her research interests focus on Financial Therapy and how to create more empirical evidence to support work that she has seen change so many lives in her clinical experiences. Her work has been published in The Journal of Financial Therapy, The Journal of Financial Planning, The Journal of Family Economic Issues, The American Journal of Family Therapy, Journal of Systemic Therapies, Women and Therapy, Journal of Couple and Family Therapy, Journal of Sex and Marital Therapy, and Journal of Creativity in Mental Health. Dr. McCoy serves as secretary on the board of the Financial Therapy Association. She is the guest editor for the Journal of Contemporary Family Therapy’s upcoming special issue focused on financial therapy and the associate editor of profiles and book reviews for The Journal of Financial Therapy. Dr. McCoy has practiced financial therapy with clients in her private practice and alongside financial planners in conjoint sessions. She is currently developing a computerized version of Narrative Financial Therapy with Morningstar and plans to run randomized control trials later this year.