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American Medical News

The investor within: Balancing your psychological make-up with your financial make-up.

Financial psychologists work to help you uncover the "why" behind your investment strategies.

By Alice Shane, AMNews correspondent.


If you live beyond your means, carry excessive debt, engage in inappropriate high-risk investing or have frequent battles over money with your spouse, your problem may not be in your bank account--it may be in your head.

That's the basis of the emerging field of financial psychology. While your certified financial planner is focusing upon your portfolio, a financial coach (which is what some of these professionals call themselves) could be rummaging through your psyche, unearthing reasons and attitudes that lead to dysfunctional behaviors with money. Television talk show host and author Suze Orman has made a fortune selling this approach to money management.

Right now there is no licensing or accreditation for a "certified financial psychologist," so conceivably anyone could claim to be one. But that aside, Erik Thurnher, MD, an emergency physician and certified financial planner, likes the concept. In fact, he thinks this approach is such an important and legitimate development that he has launched a search for a qualified financial psychologist to recommend to his own clients.

"We're looking for someone with a formal psychology or psychiatry background, someone qualified to help clients understand how spousal relationships, childhood upbringing and control issues cause dysfunctional financial behaviors," says Dr. Thurnher, who thinks someone in this position should also have at least a basic understanding of financial planning concepts.

Experts believe that an individual's beliefs about money are formed between the ages of 5 and 12.

Dr. Thurnher, who heads Physicians Financial Consultants, a fee-for-service financial advisory for physicians based in Newport Beach, Calif., believes that his own holistic exploration into goals, values and how money fits into the big picture of clients' lives, can be therapeutic.

"Once clients go through the process--take a look at their cash flow, debt repayment, retirement and estate planning--they tend to be much more grounded, more realistic and less anxious about their financial situation."

But some physicians, he says, need more.

"Most of the doctors we work with are pretty rational and have reasonable expectations about their abilities and what they can achieve through investing. But we do have a few with highly charged emotional issues around money. They're the ones who can benefit. There's no question that money ends up being an extension of many life issues: marriage, kids, one's sense of self worth," he says.

Physician, know thyself

The idea behind financial psychology is that, especially in tough investing markets, doctors need to know why they make the financial decisions they do, and why they would undertake a certain financial regimen, before deciding what to do with their money.

Advocates of financial psychology say the process is especially key for physicians because managed care keeps chipping away at doctors' income and autonomy, and because physicians entering practice tend to load up on debt, even beyond their student loans. And a deeper understanding of the emotions and feelings related to money can lead to greater success and peace in investing.

Mark Goldblatt, MD, a psychoanalyst in private practice and an attending psychiatrist at McLean Hospital, Belmont, Mass., sees money issues as high in the hierarchy of neuroses. He recalls his own teetering on the slippery slope of credit card debt when he was a newly minted resident.

"Doctors have money thrown at them when they finish their residencies. It took me over 15 years to realize that I had to get rid of those credit cards, not borrow or live above my means," he says. He now has a financial planner who manages a conservative portfolio for him and his wife.

"The idea of easy access to credit is something to look at very carefully, not going into it blindly, because it can be a difficult problem to bail yourself out of," he warns, echoing the common perception that doctors have a general tendency to live above their means, to believe there'll always be more money and that it won't be a burden to pay it back.

It all starts early. Marty Carter, a therapist and partner at Charles D. Haines Inc., a Birmingham, Ala., financial planning firm, believes financial behavior stems from early childhood experiences and parental example. Indeed, psychological theorists say that beliefs about money are formed between the ages of 5 and 12.

In Carter's two-hour sessions at Charles D. Haines, which hired her specifically to expand its services into financial psychology, she often explores family dynamics, including spousal power and control issues. Carter was a biochemist before earning a degree in clinical social work to specialize in marriage and family therapy.

"Sometimes, couples don't fight fairly about money or can't talk about it at all because they fear conflict," she says.

Financial psychologists also focus upon the conscious and unconscious feelings you project upon money, as well as behaviors, such as overspending, that chip away at your financial and emotional well-being.

"With self-awareness comes self-control and self-regulation," says Kathleen Gurney, PhD, a psychologist, founder of Sarasota, Fla.-based Financial Psychology Corp., and author of Your Money Personality: What It Is and How You Can Profit From It.

Hourly rates for sessions with professionals who specialize in financial psychology range from $150 to $180.

Because the field is not yet recognized as a specialty, your best chances of locating a experienced therapist may be through a financial planner who has partnered with one.

A coach instead of the couch

This is not to say that every doctor needs therapy before investing. But, the proverbial first step in problem-solving may be recognizing you need help. A financial planner can serve as a kind of coach, helping set up a playbook to reach your investment goals.

Even if you could do this yourself, you likely don't.

"Doctors are so busy and their practices so complicated," said Dr. Gurney, "that they're spending more time trying to figure out how to earn more, than in managing their money. But the focus should be shifted: You must remember that what you've got is important and that you don't want to lose it."

People are increasingly reaching out to financial planners for this help, said Carol Kauffman, PhD, an attending psychologist and instructor at Harvard Medical School, who writes and speaks on financial psychology issues. And while Dr. Kauffman knows some doctors who are savvy enough to understand how important it is to have a financial professional work with them, there's a subset whose overconfidence leads them to believe they can do it themselves.

"Their medical training gives them a useful 'head-set' for the kind of long-range thinking you need to be a good investor. But not all doctors are paragons of financial health. Just because they're smart and well-educated doesn't mean they understand the contours of the market and its irrational forces. Nobody wakes up thinking they can be a brain surgeon, but some people believe they can manage money as well as any trained financial professional," she says.

Dr. Kauffman urges medical students and residents to see a financial planner before setting up practice so that they get on the right footing early, before they're blindsided by a jump in income without knowing how to handle it.