The key to financial success is the creation and long-term respect of the financial perspective. Sometimes it is easier to say than done.
How mental health affects financial planning
Stress in three areas of your life can damage your financial plan for heartbeat
Financial / Economic Events
- Market growth / fall, poor economic news, recession, employment, interest rates, etc.
- Spouse's death, divorce, change of marital status, trauma, career change, etc.
Physical / mental illness
- There is mental health (i.e., the state of well-being, the achievement of potential, the fight against normal stress and mental illness), dementia, mood and anxiety, addiction disorders and, of course, psychotic disorders, etc.
Stress from these three areas can affect your mental health and affect your financial decision making.
In the face of stress, we try to fight, fly or freeze.
- ERROR: We can become aggressive, emotionally responsive and take impulsive, short-term decisions
- FLIGHT: We can get rid of, deny or avoid important decisions.
- FREEZE: We can get stuck or paralyzed to a place where we can't even entertain when we make a decision
All these reactions can hamper the success of your financial plan.
It is so important as a financial planner to recognize some of the common health issues facing Canadians. These include:
- Reduced financial capacity
- Substance Abuse
- The problem with gambling
Any of these issues could be catastrophic to your financial well-being.
Obligation of financial advisors
A balance between privacy and confidentiality consultants is essential. But that does not mean that you do not have a duty of trust to sometimes protect your client. Reach out to industry professionals, look for rigorous / comparative support and further training to help you find warning signs and legal boundaries.
Addressing the financial crisis
The best time to deal with the financial crisis is five years before it happens. Now is the time to talk about possible issues for both clients and consultants and to document how mental health problems might arise.