What Is a Financial Therapist?

Finances are a significant source of tension in many people’s lives. Per a study from Thriving Wallet in 2023, 90% of Americans say that money impacts their stress levels. Whether it be paying bills, saving for retirement, or paying for a child’s college education, managing your finances can be tough.

Fortunately, some professionals dedicate their time to helping clients manage their money-related stress and stay on track toward their goals. These are financial therapists, who typically receive a certification from the Financial Therapy Association (FTA). In this article, we’ll explain what these experts do, how they help clients, and when you may want to consider hiring one.

What a Financial Therapist Does

A financial therapist is a professional who helps clients manage their stress and anxieties about money. The FTA describes the practice as being “interdisciplinary,” combining financial and psychological competencies into a holistic service. Because of this, these experts must possess background knowledge in both areas to effectively serve clients.

Often, one of these professionals will carry the Certified Financial Therapist (CFT-I) designation. The FTA awards this after a candidate completes financial and psychological literacy requirements. CFT-Is must also adhere to strict ethical standards, which we’ll expand upon below.

The role of a financial therapist is not necessarily to act as an advisor, but rather to guide you on an emotional and mental level. This includes eliminating bad habits, fostering positivity, and helping you act on issues you may be facing. For instance, if you’re constantly overspending despite your budget, one of these experts can help you get to the root of the problem.

CFT-I Ethical Standards

As mentioned, those with the CFT-I designation must follow an extensive list of ethical standards set forth by the FTA. These split into nine different categories, each with a unique list of responsibilities. As it relates to clients, a CFT-I must act in a fiduciary capacity and, “in every circumstance, do no harm,” per the FTA’s handbook.

A CFT-I must also disclose their fees/fee structure upon their initial meeting with clients. And, per the FTA, these professionals may only charge based on an hourly rate, assets under management (AUM), or a monthly retainer. Commissions or “kickbacks” are strictly prohibited by the FTA.

Financial Therapists vs. Advisors

Financial therapists and advisors act in a similar capacity; however, there are key differences between the two. The latter is in the business of offering guidance or advice on how to manage one’s money, achieve growth, or reach goals. On the other hand, the former primarily focuses on addressing behaviors, attitudes, and thoughts regarding one’s finances.

Additionally, financial therapists typically have expertise in both money-related and psychological fields. This makes them qualified to assist clients with behavioral or emotional issues in this context. An advisor typically lacks the expertise necessary to address these concerns.

Becoming a Financial Therapist

The general prerequisite to becoming a financial therapist is that one must possess interdisciplinary expertise in psychology and finance. However, to obtain the CFT-I designation, one must complete a wide array of requirements, including courses and exams, to be awarded the designation. Below is a more specific breakdown of the requirements candidates must complete:

Education

The FTA requires candidates to hold a bachelor’s degree in a finance or mental health field to become a CFT-I. Alternatively, one may have a bachelor’s in an unrelated discipline, but hold a Certified Financial Planner (CFP) or Accredited Financial Counselor (AFC) designation. If a candidate has none of these, but would still like to apply, they must submit their credentials for special review.

Competency Training

A series of educational videos provided by the FTA serves as the course material for the accompanying exams. They cover various key topics that relate to financial therapy, including ethics, relationships, as well as relevant research. Candidates may use these as a valuable resource to prepare for exams.

Experience

Obtaining the proper experience is a key step toward becoming a CFT-I. Candidates must complete a total of 500 hours, half of which must be in a client-facing manner. Per the FTA, the remainder can be completed in a variety of ways, including by teaching, conducting research, giving presentations, or continuing to work with clients.

Applicants must also submit two written pieces here. This includes a letter of recommendation, as well as a 1,000-word (up to 1,500 word) “summary narrative” that details how their education has affected the way they think.

Exams

Last, candidates must complete and pass a 100-multiple-choice question online exam within two hours. This only occurs after an applicant has completed each of the other requirements.

Who Should Hire One

If you need help managing your money or developing a plan, it’s best to seek out an advisor or investment manager. However, if you feel that you have a bad relationship with money or need to overcome psychological obstacles, you may want to consider seeking a therapist’s help. This generally refers to situations where your finances cause:

• Emotional stress, i.e., fear, worry, or anxiety
• Communication issues
• Bad habits, such as constantly overspending (or underspending)

Keep in mind that a financial therapist’s specialty isn’t necessarily to manage your money, it’s to help you achieve a feeling of empowerment and minimize stress/anxiety. Even if, numbers-wise, you’re doing well, it may be wise to hire one of these experts if you’re experiencing any of the above. Experts such as those with the CFT-I designation will be most well-equipped to help you.

How Much They Cost

The cost for a financial therapist can vary depending on expertise, experience, and fee structure. Professionals with the CFT-I designation must charge clients in a fee-only capacity. Specifically, the FTA says its experts may only use AUM, hourly rates, or a monthly retainer as the basis for its fees. In general, one of these professionals can charge anywhere from $100 to $800 per hour.

How to Find a Financial Therapist

If you’ve decided that you may need a financial therapist, the next step is to find one in your area. However, this may be a tough task if you don’t know where to look. It’s important to find a professional that aligns with your goals and needs. Luckily, the FTA offers a directory that allows you to sort by location, expertise, fee structure, and the services you require.

Frequently Asked Questions

Why is financial therapy important?

Financial therapy is an important practice because it helps people repair their relationship with money. Clients of all asset levels or economic conditions may be susceptible to poor habits, fear, or stress. Working with a therapist can help mitigate these issues and improve one’s overall quality of life as a result.

How are financial therapists different from advisors?

Therapists offer an interdisciplinary approach that helps clients deal with psychological issues regarding money. Advisors, on the other hand, mainly work with clients to manage their finances, develop short- and long-term plans, as well as achieve growth within their portfolios.

When should I see a financial therapist?

If you feel that money is causing you stress, anxiety, or fear, it may be time to speak with a financial therapist. This is also true if you catch yourself having bad habits, such as overspending or, in some cases, irrationally underspending.

Clients may also want to see someone if their finances are impacting their relationships with others. For example, if money is a contentious point in your marriage, a therapist may be able to help.