Financial therapy to your FINANCIAL SECURITY?

[Temperament]

Extract:- Mixing psychology and wealth management
24 Feb 2015 19:41 by PAUL SULLIVAN

/////////////////////////////////////////////
A financial therapist’s role is to understand the stories we tell ourselves, true or not, about money – or in the parlance of the field, our “money scripts”. Brad Klontz, a financial psychologist in Hawaii and an associate professor at Kansas State, thought up the phrase. In his research, Mr Klontz has found four basic scripts: money avoidance, money worship, money status and money vigilance. Each has its own complications.
People with money avoidance tried to distance themselves from money. The result was predictable: They undermined their financial well-being.
Those who worshipped money believed it would cure all their problems, if they only had more of it.
People with a money status script seemed similar to money worshippers, except they connected money to their sense of well-being. Or as Mr Klontz put it, self-worth was linked to net worth.
The last script was money vigilance. These people did not flaunt what they had; they paid their debts on time and were generally cautious about overspending. If anything, they were the ones who could deprive themselves for no rational reason.
Like mental health problems, these money scripts often existed outside of people’s consciousness and were formed in reaction to events that occurred in their lives. One example Mr Klontz gave was of a family on the verge of losing its house because of past bad decisions. In one case, a grandparent comes in and saves the family. In another, the parents save the house themselves. In a third, the family loses the house.
The precipitating event was the same in all three cases, but how people in those scenarios will feel about money will be quite different. And those different feelings are what make helping people overcome money disorders difficult for advisers. Edward Horwitz, a former insurance executive who now works as a financial therapist and instructor of financial planning at Creighton University’s Heider College of Business, is consulting with a company that administers employee retirement plans.
The company, which did not want to be named because it was in the early stages of the programme, has hired Mr Horwitz to provide financial therapy to plan participants as a way to get more employees saving in their retirement plans but also to distinguish itself in a crowded field.
Mr Horwitz has eschewed the traditional 401(k) approach of talking about fund choices, contribution limits and income-replacement targets – difficult to imagine for someone thinking 30 years out.
“We’re trying to go in there and work more from the emotional and behavioural aspects to help them first connect emotionally with what their retirement is going to look like,” he said. “I use emotional triggers that tap into the sensory experience that people want to have in retirement. We have them understand retirement with no quantitative aspects involved.” The experience is not exactly like lying on a couch. But as with traditional psychotherapy, the message is not always what people want to hear, and that is when the real work starts, Mr Horwitz said.
“When people face the numbers, it may come at a price that is more than they can possibly afford,” he said. “But, at least they know that. Then they’ll say, ‘Okay, what can I afford?’ They’ll have a better expectation.”
A big challenge with financial therapy, greater in some ways than financial advice or counselling, is that it lacks formal accreditation. Financial therapy is meant to get people thinking about the financial decisions they make – and not about their investment returns. These methods of addressing clients could help give people of various income levels the financial security that only the wealthy enjoy. NYT


Unquote:-
How much truth is there from this article? Still psychology and your experience matters. Of course your temperament.