It’s no secret Americans are stressed about money. In fact, 74% of 4,000 working-aged people surveyed by CNBC recently said they were concerned about their personal finances.
While many people think making more money is the only way to relieve financial stress, a new study by the Financial Planning Standards Board (FPSB) offers another remedy with a positive side effect – improved mental health.
By hiring a financial planner, the FPSB study showed the majority of surveyed consumers felt their mental health and family life had improved.
In the FPSB global survey, 15,000 people were interviewed regarding how professional financial advice affected their mental health. 51% confirmed that their mental health and family life had improved after working with a Certified Financial Planner professional.
The breakdown from consumers of the benefits they received working with financial planners was as follows – financial well-being and peace of mind (38%), financial confidence (37%), stronger understanding of financial matters (36%), and increased wealth (33%). A strong testament to the positive influence a financial advisor can have in many aspects of their client’s lives.
Are financial advisors surprised by the number of clients who report the well-being effects their work delivers?
“I’m surprised the numbers aren’t higher!” says Kevin Lao, Financial Planner at Imagine Financial Security, pointing to the effects his work can have on romantic and inter-family relationships.
What other connections lie between wealth management and well-being? Diving deeper into the impetus for financial management and the unique dynamics therein help illuminate interesting insights into this hidden advantage of hiring a financial advisor.
Health and Wealth
Life’s priorities don’t always fit neatly into category boxes. Health and wealth have more in common than it may appear. They don’t just rhyme – they are becoming increasingly intertwined.
In recent years, Americans have started identifying well-being as the primary measure of wealth. This all-encompassing factor was cited by 40% of those surveyed in the latest Charles Schwab Modern Wealth Survey. When questioned about what wealth represents to them, only 32% cited money, and 26% said assets.
This points to a real shift in perspective by American adults.
Before the pandemic, in the last Schwab survey of 2017, the leading measure of wealth was invariably money and assets. The transition to a work-from-home model under lockdown, physical isolation from family members as well as the urgent emphasis on medical health, may have contributed to a recalibration of what truly matters to most.
While the shift among Americans to prioritize health over wealth appears encouraging, financial experts remind us that the former often requires a sufficient level of income or assets in order to create the capacity for people to focus on their well-being.
“At a primal level, financial security insulates a person from the all-consumptive panic of not knowing where one’s next meal will come from or where one’s next shelter will be located, says Dr. John Henry, CEO of Story Makers Investment Advisors. “Even when one’s most basic needs are met, a measure of wealth is required to focus on health. You can’t spend much time at the gym if you are working 90 hours a week to make rent—much less devoting time to your mental, intellectual, and spiritual health.”
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Finance and Relationships
Some advisors say their work plays an outsized role in minimizing potential conflict in a marriage and getting a couple on the same financial page.
“Money issues are the number one reason for divorce,” says Lao. “Working with a trusted financial planning partner, especially for married couples, can ensure there is a place where both parties are heard. Whether planning as a single or with a partner, validation from a seasoned professional that you are on track for your goals is priceless,” he adds.
For older clients, Lao says planning can help them fulfill their spending potential and enjoy their golden years.
“Oftentimes, my clients are worried that they are spending too much. However, thoughtful planning can essentially help where the rubber meets the road,” he adds. “I have a client planning a huge trip to the Grand Canyon next year and they’re taking all of their children, grandchildren, and great-grandchildren!”
Ever Increasing Numbers
Financial advisors are being sought in ever-increasing numbers, with recruits steadily rising within the profession. In 2021, according to the U.S. Bureau of Labor Statistics, there were over 330,000 financial advisors in the U.S. That number is predicted to rise by 15% as soon as 2031, an increase triple the average growth rate for all professions. Indeed, government sources claim the growth rate is “much faster than average.”
Moreover, first impressions can lead to lasting ties when it comes to advisors. Many clients who like their first financial advisor find they can stick to them long term, indicating the emotional bond.
One thousand high-net-worth investors (those with investable assets above $500,000) answered questions recently on their personal connection with their financial advisor. Nearly 60% of investors responding to the Dynasty Connect survey said that their current advisor was the first financial professional they had met. Thus, they had only ever spoken to one advisor and continued strengthening that relationship and maintaining their services.
While the recent CNBC survey shows the vast majority of Americans remain concerned about their financial health, consumers taking a more proactive approach to their finances by partnering with a financial planner report feeling healthier both mentally and monetarily. Hiring a financial advisor who has earned relevant credentials like the Chartered Retirement Planning Counselor or Certified Financial Planner designations can further place consumers at ease.
Financial planning is not a substitute for clinical therapy, family counseling, or other mental health practices, though it offers surprising benefits to clients’ overall well-being. Taking a holistic approach to mind and money can help people not only to reach their financial goals but also make strides toward overall well-being and achieve greater satisfaction from life.
About the author
Contributing Writer, Wealthtender
Liam Gibson is a Taiwan-based freelance journalist who covers tech, geopolitics, and finance. He has written for Al Jazeera, Nikkei Asia Review, South China Morning Post, Straits Times, National Interest, and has appeared in Fortune Magazine, and several other international media outlets.
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Disclaimer: This article is intended for informational purposes only, and should not be considered financial advice. You should consult a financial professional before making any major financial decisions.
Frequently Asked Questions
Can a financial planner help with financial stress?
Many people report that it does. In FPSB’s 2023 global consumer research, which surveyed more than 15,000 consumers in 15 territories, 51% of clients working with a CFP professional said financial planning had a positive effect on their mental health and family life. A planner can reduce uncertainty by organizing your finances and setting a clear plan, but planning is not a substitute for professional mental health care.
What does a CFP certification require?
To earn the CFP certification, a candidate must complete CFP Board-registered coursework, hold a bachelor’s degree, pass a 170-question exam, and complete either 6,000 hours of professional experience or 4,000 hours of apprenticeship experience. Candidates must also pass a background check and agree to CFP Board’s ethics standards, which require acting as a fiduciary when providing financial advice.
Can a financial planner help couples who argue about money?
A financial planner can act as a neutral third party who helps partners name shared goals, understand each other’s priorities and agree on a budget and savings plan. Having a concrete plan often turns recurring arguments into decisions with clear tradeoffs. Planners are not marriage counselors, though, so couples dealing with deeper conflict may benefit from working with both a planner and a licensed therapist.
How do I check a financial planner’s credentials?
You can confirm whether someone holds the CFP certification, and see any public disciplinary history, using CFP Board’s verification tool at cfp.net. For advisers and brokers, the SEC’s Investment Adviser Public Disclosure site and FINRA BrokerCheck show registrations, employment history and disclosures. Checking these before you hire someone takes only a few minutes.