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Reviewing Financial Infidelity in A Financial Planning Context

Financial infidelity is one of the more complicated issues that financial planners face when meeting with couples. The hurt and betrayal that often comes up in the planning room is made even more complicated by the different perceptions that planners have about it.

Therefore, here is a quick overview. Financial infidelity does not have any real set definition, but Brad Klontz, Kristy Archuleta and Anthony Canaly broadly defined it in Financial Therapy: Theory, Research, and Practice as, “purposeful financial deceit between two or more individuals wherein, there is a stated or unstated belief in mutual honest communication around financial matters.”

Financial infidelity can include financial cheating including, “hiding purchases from spouses, having secret credit cards or keeping secret personal bank accounts,” according to a 2018 Journal of Financial Therapy article titled, “Financial Infidelity in Couple Relationships.”

Understanding your beliefs about what is and is not financial infidelity will have a huge impact on how you handle it when it comes up and how much your clients will trust your help. So let’s dig into this a bit.

It is important not to minimize “small” incidents of financial infidelity as it can reflect larger relationship problems. It may be more about how individuals assert their needs, manage conflict and trust each other more than the actual money.

Rates of financial infidelity vary by definition, but the 2018 Journal of Financial Therapy article referenced above found that 27 percent of individuals admitted to keeping a financial secret from their partner. The effects of the financial infidelity can vary from financial planning problems, interest on hidden debt and postponing major life events, to decreased marital satisfaction, loss of trust, depression and defamation of character.

Steps to Address Financial Infidelity

What can you do if you discover financial infidelity? Here are some steps that are likely to help you as you help your clients move forward:

1.) Ground yourself. Notice your own feelings with this issue. Are you angry? Sad? Scared? We all bring ourselves into our work with clients. It is important to process your own feelings and thoughts so that you can be grounded when you interact with your client.

2.) Be direct, there is no point in delaying. If it does not come out in session, it will later. So do not postpone a conversation because it is uncomfortable.

3.) Try to be open-minded. It is best if you can look at the reasons why this happened without judging the person. The more you know about the clients’ emotions and thoughts, the better you are going to be at addressing their needs and helping ensure that it does not happen in the future.

4.) Normalize and validate. Both partners are likely feeling hurt and need to know their feelings are normal and okay to have. Try to empathize with both partners’ experiences, while holding accountability and not taking sides.

5.) Problem solve. This is an opportunity for you to instill hope. Most tangibly, you will help them come up with a plan, but you need to know everything to help them. This will not only make them feel more hopeful about their work with you, but also help them see their role of disclosing as part of the healing. Remember everyone (at some level) wants to be the “good guy” so let them help you by coming clean.

6.) Tell them to do their research before disclosing to their partner. The partner who has not disclosed is probably fearful of the reaction. It is crucial that you discuss and prepare them to approach the topic in a way that will not incite violence.

Financial infidelity does not look the same and does not come from the same motivations. It can come from addiction, abuse, an affair, fear, shame or pride. Your actions will not be one-size-fits-all but should reflect what your clients need from you. Doing your own research on how to handle these topics or by watching a replay of our webinar for the Financial Planning Association and Financial Therapy Association (which will be available soon), you can gain skills in approaching these situations.

This is a challenging topic, but as you address your own emotional reactions and learn to connect with clients in pain, you can effectively navigate this issue and others. Most importantly, you can and will provide your clients with support in a helpful way.

On a final note, remember that you do not have to do this alone. Financial infidelity is a complex issue that may provide the need for a couple counselor or marriage and family therapist. There is still a stigma against therapy in many places, so you can be an invaluable resource to your client by doing your own research and finding a mental health professional you trust near you that can serve as a referral source.

Editor’s note: The authors of this post explored this topic more in-depth in a Financial Planning Association and Financial Therapy Association webinar called: “Difficult Conversations 3: Couples Dealing with Financial Infidelity.” The other two parts of the three-part webinar series dealt with ambiguous loss from Alzheimer’s disease and financial enabling. All three webinars will be available on-demand for members in the fall of 2019.

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Nathan Astle is currently pursuing a master’s in couple and family therapy from Kansas State University with a graduate certificate in Financial Therapy. He is currently researching the interplay of couple attachments, financial transparency, and money scripts on financial stress.

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 Megan McCoy, Ph.D., LMFT, is an adjunct faculty member at Kansas State University where she teaches courses for the financial therapy certificate program. Her research focuses on financial therapy and has been published in several journals including the Journal of Financial Therapy and the Journal of Financial Planning. She serves on the board of the Financial Therapy Association and is associate editor of book reviews and profiles for the Journal of Financial Therapy.


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Avoid the Top 10 Productivity Pitfalls

There are many barriers to our productivity in the workplace. Avoid the following pitfalls to productivity:

Doing 100 percent. Giving 100 percent to client service is not doing 100 percent. Doctors don’t take blood pressure, staff does that. Delegate as much non-critical service as possible.

Outdated habits. Outdated habits waste time and money. Periodically examine established practices. Eliminate any that have lost value.

Addition only. We add to our lists but frequently forget to subtract, causing overload. If something new is important, drop something that’s now less important.

Always being available. Being responsive turns into a trap if we’re always available. Rarely do clients need immediate attention. Train staff to manage requests. You can always be interrupted for a true emergency.

Distraction delirium. New research shows multi-tasking significantly diminishes productivity and quality. Good concentration requires at least 20 minutes of focused time. Build boundaries around email, phone and other interruptions.

Energy flow. Biorhythms are a fact. People concentrate better at certain times of the day. Schedule workflow around individual energy for highest productivity.

One-size-fits-all. Time-management takes personal discipline and a personalized system. There is no one-size-fits-all. Don’t waste time forcing a fit. Custom tailor the system to fit you.

Life. Life is filled with disruptions and setbacks are completely normal. Expect them and adapt goals to accommodate reality. Research shows those with realistic optimism are the most successful in overcoming obstacles and achieving their goals.

Brand confusion. Well-meaning but exhausted professionals fall into the trap of providing high-end service without the pricing and the resources to sustain it. We don’t get fine dining at a fast food joint and there’s no dollar menu at five-star restaurant. Define your brand and structure the business to match.

Should’s. Lots of “best practices” provide real value. However, people sometimes do things just because they should. Unless it brings real value to you, your business and your clients, don’t succumb to should.

Two Steps to Get Started Now

Remove team time-wasters. Call a team meeting specifically to discuss and eliminate time-wasters. You’ll be amazed by small shifts that can make a big difference. Have everyone come to the meeting with at least one time waster and a solution that is quick to implement. Then prioritize and execute on the solutions immediately.

Do a client “value-check.” Formally or informally, ask clients about optional communication and service touches. Find out what clients really value. You may find things of low value that can be easily eliminated. It’s easy to stop doing things clients don’t want.

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Barbara Kay, business psychology and productivity coach, helps advisers and firms maximize potential. As a member of the FPA Coaches Corner, Barbara offers a free consultation to all FPA members. Visit: www.barbarakaycoaching.com.


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Cannabis: The Investment of the Future?

There’s a dispensary at the corner of Wolff Street and 38th Avenue in North Denver. When recreational marijuana was legalized in Colorado in 2014, the boomer husband-and-wife duo who owned the joint (pun heavily intended) ran it out of a tiny, slightly dilapidated white house.

Today, that small white house is no longer. It is now a sleek, stucco, dark gray house with lime-green accents. The business swiftly expanded to include the large neighboring brick building, which had been abandoned for many years. The entire block has been transformed and beautified by the booming business.

The marijuana industry is among the fastest-growing job markets, according to CNBC, and consumption doesn’t seem to be going anywhere. Usage is growing among baby boomers, GenXers and millennials. Bloomberg reports that the Gen Z cohort (those born after 1998) will be the “ultimate pot consumers” with their $143 billion in buying power (according to Forbes).

Sales Projected to Increase

Arcview Market Research and BDS Analytics found that legal cannabis sales totaled $11 billion in 2018 and they are projected to grow 350 percent over the next 10 years. To put that in perspective, U.S. beer sales (domestic premium brands), totaled $12.6 billion in 2018.

Clients Are Asking About It

For the first time this year, the Journal asked about cannabis investments in our annual Trends in Investing Survey. More than half (55 percent) of respondents said that clients have inquired about investing in marijuana or cannabis stocks/companies in the past six months (see key results of the survey on page 18).

Various Opportunities to Invest

Marijuana Business Daily reports that retail and cultivation continues to lead the pack in terms of cannabis investment, but other opportunities exist. The Motley Fool reported that investors should keep an eye on the companies that have product differentiation, such as cannabis alternatives. Also, keep an eye on the international demand for medical marijuana. Canada will decide this year whether to legalize products other than dried cannabis and cannabis oils.

Editor’s note: This article originally appeared in the June issue of the Journal of Financial Planning in the Observer section. The Journal of Financial Planning is a member benefit for Financial Planning Association members. Not a member yet? Become one today.

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Ana Trujillo Limón is senior editor of the Journal of Financial Planning and the editor of the FPA Practice Management Blog. Email her at alimon@onefpa.org, or connect with her on LinkedIn