{"id":1047,"date":"2023-09-19T10:38:00","date_gmt":"2023-09-19T14:38:00","guid":{"rendered":"https:\/\/www.bellvest.ca\/family-wealth-peterborough\/resources\/financial-phobias\/"},"modified":"2025-06-25T10:44:33","modified_gmt":"2025-06-25T14:44:33","slug":"financial-phobias","status":"publish","type":"resources","link":"https:\/\/www.bellvest.ca\/family-wealth-peterborough\/resources\/financial-phobias\/","title":{"rendered":"Understanding Financial Phobias"},"content":{"rendered":"<p><em>\u201cSometimes, it is not the money in your bank account that solves your problems, but the wisdom in your head.\u201d \u2013 Michael Bassey Johnson<\/em><\/p>\n<p><!--more--><\/p>\n<p>One of the greatest tools at a financial advisor\u2019s disposal is the ability to empathize with clients to develop a deeper understanding of their circumstances. Sometimes it\u2019s the excitement they feel over watching their financial plan come together, but it can also be about their concerns.<\/p>\n<p>In some cases, these worries manifest as financial phobias. It\u2019s likely that many advisors aren\u2019t familiar with the term, but they\u2019ve likely unknowingly come across it before.<\/p>\n<p>Here are a few ways to identify and address them for a better advisor-client relationship.<\/p>\n<h3><span style=\"\">What Are Financial Phobias?<\/span><\/h3>\n<p>Generally speaking, they\u2019re a class of extreme and often irrational fears related to financial matters.<\/p>\n<p>They can present themselves in acute episodes, such as not opening bank statements after a severe loss, or they can be chronic, like ignoring credit card balances entirely. In either case, they most commonly involve a degree of avoidance behaviour.<\/p>\n<p>The University of Cambridge <a href=\"https:\/\/www.theguardian.com\/money\/2003\/jan\/27\/highereducation.medicineandhealth\">conducted a study<\/a> that concluded that symptoms follow a similar pattern to anxiety:<\/p>\n<ul style=\"line-height: 1;\">\n<li>\n<p>+50% suffer apprehension.<\/p>\n<\/li>\n<li>\n<p>45% have elevated heart rates.<\/p>\n<\/li>\n<li>\n<p>38% lack any interest in money matters.<\/p>\n<\/li>\n<li>\n<p>15% are immobilized.<\/p>\n<\/li>\n<li>\n<p>12% feel physically unwell.<\/p>\n<\/li>\n<li>\n<p>11% experience dizziness.<\/p>\n<\/li>\n<\/ul>\n<h3><span style=\"\">How Common Are Financial Phobias?<\/span><\/h3>\n<p>According to Brenan Burchell, a senior lecturer, approximately 20% of the population suffers from financial phobias. An interesting demographic trend took shape as well; the condition is more prevalent in women and younger people.<\/p>\n<p>It\u2019s worth noting that this research took place in 2003, but in a <a href=\"https:\/\/www.perkbox.com\/uk\/resources\/blog\/financial-wellbeing-survey\">2019 UK financial wellbeing survey<\/a>, 61% of respondents reported money as the leading cause of stress, ahead of work, health, and relationships. Globally, BlackRock\u2019s <a href=\"https:\/\/www.blackrock.com\/corporate\/insights\/investor-pulse#intro\">2019 Global Investor Pulse<\/a> found that 43% aren\u2019t thinking about their future because they\u2019re too worried about their current financial situation. In 2022, Capital One\u2019s <a href=\"https:\/\/www.capitalone.com\/about\/newsroom\/mind-over-money-survey\/\">research<\/a> found that a staggering 77% of Americans noted anxiety over their financial wellbeing, and 58% felt that finances controlled their lives.<\/p>\n<p>The most common financial phobias are typically:<\/p>\n<ul style=\"line-height: 1;\">\n<li>\n<p>Peniaphobia, the fear of poverty or being financially insecure.<\/p>\n<\/li>\n<li>\n<p>Plutophobia, the fear of wealth or its responsibilities.<\/p>\n<\/li>\n<li>\n<p>Atychiphobia, the fear of failure or taking risks.<\/p>\n<\/li>\n<li>\n<p>Chrometophobia, the fear of money or spending money.<\/p>\n<\/li>\n<\/ul>\n<h3><span style=\"\">Where Do Financial Phobias Come From?<\/span><\/h3>\n<p>Irrational fears in general can <a href=\"https:\/\/citeseerx.ist.psu.edu\/document?repid=rep1&amp;type=pdf&amp;doi=6f8394f81f87c0f6d003d9a1dfa4947ed4cdb1ee\">develop at various ages<\/a>, and they\u2019re typically rooted in exposure to some sort of stressor or trauma. Whether an isolated event (i.e., your parents lost their home) or a standing environmental factor (i.e., money was scarce during your childhood) tends to structure phobic behaviours.<\/p>\n<p>In the first case, a client may be deeply fearful of taking on debt, and in the second example, they might resent the idea of spending a dime. Other impacts include:<\/p>\n<ul style=\"line-height: 1;\">\n<li>\n<p>Focusing solely on avoiding losses which leads to missed opportunities.<\/p>\n<\/li>\n<li>\n<p>Reacting to volatility and selling suitable investments in a panic.<\/p>\n<\/li>\n<li>\n<p>Impulsively investing in speculative or trending assets without due diligence.<\/p>\n<\/li>\n<li>\n<p>Excessive risk-taking due to an overconfidence in trading capabilities.<\/p>\n<\/li>\n<\/ul>\n<h3><span style=\"\">Is There a Need for Advisors to Address Financial Phobias?<\/span><\/h3>\n<p>The uptick in awareness (and <a href=\"https:\/\/www.forbes.com\/sites\/jackkelly\/2022\/07\/20\/financial-anxiety-is-increasing-as-inflation-surges-and-people-are-living-paycheck-to-paycheck\/?sh=6ead60d65f26\">number of cases<\/a>) of financial anxiety has led the CFP Board to update their principal knowledge topics, and the psychology of financial planning has been <a href=\"https:\/\/www.cfp.net\/get-certified\/certification-process\/2021-practice-analysis\">introduced to the curriculum and certification exam<\/a> as of 2022. Vanguard even listed behavioural coaching in their <a href=\"https:\/\/advisors.vanguard.com\/insights\/article\/putting-a-value-on-your-value-quantifying-advisors-alpha\"><em>Putting a Value on Your Value<\/em><\/a> report, listing the potential value-add as 100 to 200 basis points in net returns. To put this in comparison:<\/p>\n<ul style=\"line-height: 1;\">\n<li>\n<p>Cost-effectiveness added 30 basis points.<\/p>\n<\/li>\n<li>\n<p>Rebalancing portfolios added 14 basis points.<\/p>\n<\/li>\n<li>\n<p>Asset allocation added 0 to 60 basis points.<\/p>\n<\/li>\n<\/ul>\n<h3><span style=\"\">How Can an Advisor Help Financial Phobias?<\/span><\/h3>\n<p>Clients deserve more out of their advisors than just charts and number crunching. The relationship should be based on trust, open communication, and, above all else, empathy.<\/p>\n<p>It is important to remember that there is a difference between <em>advising<\/em> and <em>explaining<\/em>. When a client expresses their concerns, it\u2019s often better to acknowledge them instead of dismissing or trying to describe why they\u2019re baseless worries. Open-ended questions are better suited for allowing investors to talk through their anxieties, and hopefully, find a resolution with a financial planner\u2019s <em>advice<\/em>, not an <em>explanation<\/em>.<\/p>\n<p>There is a pressing need for advisors to help clients by listening, understanding, and asking the right questions. In a world where money makes the globe spin, discussing financial worries is a moment of vulnerability\u2014it\u2019s an advisor\u2019s job to provide comfort and support in those moments.<\/p>\n","protected":false},"featured_media":172,"template":"","resources-categories":[20],"resources-type":[7],"class_list":["post-1047","resources","type-resources","status-publish","has-post-thumbnail","hentry","resources-categories-wealth-planning","resources-type-blog-post"],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v28.4 (Yoast SEO v28.4) - https:\/\/yoast.com\/product\/yoast-seo-premium-wordpress\/ -->\n<title>Understanding Financial Phobias - Weichel &amp; Associates - Bellwether Family Wealth<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.bellvest.ca\/family-wealth-peterborough\/resources\/financial-phobias\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Understanding Financial Phobias\" \/>\n<meta property=\"og:description\" content=\"\u201cSometimes, it is not the money in your bank account that solves your problems, but the wisdom in your head.\u201d \u2013 Michael Bassey Johnson\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.bellvest.ca\/family-wealth-peterborough\/resources\/financial-phobias\/\" \/>\n<meta property=\"og:site_name\" content=\"Weichel &amp; 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