The key to financial success is to create a financial plan and stay with it in the long term. Sometimes, this is easier said than done.
How mental health affects financial planning
The stress of three areas of your life can slow down the financial plan in a heartbeat
Financial / economic events
- Market increase, bad economic news, recession, employment, interest rate increases, etc.
Events of life
- Death of a spouse, divorce, changes in the civil status, injuries, change of career, etc.
Physical / mental illness
- There is a mental health (that is, a state of well-being, to reach potential, face the normal stress and there are mental illnesses), dementia, mood and anxiety disorders, addictive disorders and, of course, psychotic disorders, etc.
The stress of these three areas can affect your mental health and affect your financial decision-making.
When faced with stress, we tend to fight, flee or freeze.
- Fight: We can become aggressive, react emotionally and make impulsive decisions in the short term
- FLIGHT: We can discredit, deny or avoid making important decisions.
- FROZEN: We can be trapped or paralyzed to the point that we can not even have fun to make a decision
All these reactions may interfere with the success of your financial plan.
It is as important as a financial planner to recognize some of the common health problems faced by Canadians today. They include:
- Decrease in financial capacity
- Substance abuse
- Problems in the game
Any of these problems could be catastrophic for your financial well-being.
Duty of financial advisors
The balance act for the consultants between privacy and confidentiality is essential. But that does not mean that you do not have a fiduciary duty to protect your client at times. Reach industry experts, seek solid / continuous support and continuous education to help detect warning signals and legal limits.
Deal with the financial crisis
The best time to face a financial crisis is five years before it happens. Now is the time to talk about possible problems that could have advantages for both clients and consultants and document how a possible mental health problem could be posed.