What happens when you have a client who does not seem to be able to change financial behaviors that get in the way of making progress towards financial goals? What if your client even admits that they need to change, but they keep doing the same thing?
It is possible that your client has what is referred to as a money disorder. A money disorder is described as "persistent, predictable, often rigid, patterns of self-destructive financial behaviors that cause significant stress, anxiety, emotional distress, and impairment in major areas of one's life" (Klontz & Klontz, 2009, p. 127).
People with money disorders have maladaptive beliefs about money that hinder their ability to change what they are doing with their money. They may know that they need to change, but they just cannot. As a financial advisor, what should you know about this, and what can you do?
The Range of Money Disorders
First, be aware that there is more than one type of money disorder. The most commonly studied money disorders to date include compulsive buying disorder, gambling disorder, workaholism, hoarding disorder, financial denial, financial dependence, financial enmeshment, financial enabling, and financial infidelity (Canale, Archuleta, Klontz, 2015). Most likely you have probably only heard of two or three of these money disorders, but as an experienced financial advisor you may have seen all of these. However, you may not have known what to call them.
My guess is that you may be familiar with gambling addiction, hoarding disorder, compulsive buying disorder and workaholism. Gambling addition is a prevalent and devastating issue to many in this country. Hoarding disorder was made famous by the show Hoarders on the A&E network. We all know people who seem to buy too much and we casually refer to them as compulsive spenders or having a compulsive buying disorder, but it is a very real issue. In this country, working long hours may not be viewed as a problem, but it can certainly lead to serious consequences for individual well-being and family relationships.
What are the other money disorders? Here is a brief description about each.
- Financial denial refers to not thinking about or dealing with money even when it is necessary.
- Financial dependence occurs when one relies on others as a source of non-work income and fears that this stream of income will be cut off.
- Financial enmeshment refers to inappropriate boundaries that are in place where parents involve their children in adult financial decision-making in an attempt to reduce parents' anxiety.
- Financial enabling is not being able to say no when someone asks for money.
- Financial infidelity is having secrets about money or being dishonest about it.
You should also know that gambling disorder and hoarding disorder are the only money disorders that receive much attention in the mental health field. Both gambling disorder and hoarding disorder are diagnosable in the Statistical Manual of Mental Disorders-5 (DSM-5TM; APA, 2013), and therefore reimbursable by third-party insurance providers. Although the other money disorders are triggered by emotional responses to maladaptive beliefs about money and can be equally destructive to the individual, couple, and family, little training exists in the mental health field to help address these issues.
Helping Clients with Money Disorders
The good news is that there are tools that exist that can help you assess symptoms of money disorders. The Klontz Money Behavior Inventory (KMBI) (Klontz, Britt, Archuleta, & Klontz) was first developed in 2012 as a tool that could be used by not only researchers, but also by financial and mental health practitioners. The KMBI consists of 56 items and is divided into eight scales that assess characteristics of the eight money disorders: compulsive buying disorder, workaholism, gambling disorder, hoarding disorder, financial enabling, financial dependence, financial enmeshment, and financial denial. Research by Klontz and Britt (2012) has shown that these money disorders correspond to money scripts or money beliefs. You can access the KMBI for free by going to www.YourMentalWealth.com and taking a free assessment, using the test code: mindovermoney. I recommend that you complete it first for yourself and then ask your clients to take and share the results with you.
As a financial advisor, you are in a unique position to help people with money disorders. In fact, you may be the first to recognize or identify these behaviors, and the prudent action is to acknowledge the problem. If you suspect that one of your clients is experiencing a money disorder, referring them to a financial therapist or collaborating with a mental health professional might be in order. Although some therapists may not be aware of all of these money disorders and may have received little training about money-related issues, they do know how to treat maladaptive beliefs and create behavioral changes. With your money expertise and their understanding of behavioral change, together you can help your client overcome challenges and meet their financial goals.
- People have maladaptive beliefs about money that can hinder their ability to change what they are doing with their money.
- Money disorders show up in a range of ways, from gambling addictions to financial infidelity. As a professional, become familiar with what the disorders are and how to spot them so you can offer guidance to your clients.
- Turn to mental health experts for help as needed, but remember, they are not typically trained on money disorders, so you may have to stay involved.
- There are tools you can use to assess a client's money disorder, including the Klontz Money Behavior Inventory, available at YourMentalWealth.com using the text code mindovermoney.
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