Client Psychology (L3)

Question 1

Psychological Barriers to a Successful Financial Planning Engagement

Answer 1

1. Pre-Contemplation
   a. No intent to change (may be unaware of OR in denial that
   changes are needed)
2. Contemplation
   a. Aware that change is needed and considering making change,
   but not yet ready to take action
3. Preparation
   a. Gathering information (from a professional) in preparation to
   make a change
4. Action
   a. Action is taken to implement the plan (changes in behavior,
   environment, etc.)
   b. Bad Habits transition to healthier habits
5. Maintenance
   a. Prevention of relapse

Question 2

Money Avoidance

Answer 2

Question 3

Money Worship

Answer 3

Question 4

Money Status

Answer 4

Question 5

Money Vigilance

Answer 5

Question 6

Common Money Disorders

Answer 6

• Compulsive Buying Disorder
• Hoarding
• Gambling
• Workaholism
• Financial Enabling/Dependence

Question 7

Common Sources of Money Conflict

Answer 7

• Financial Infidelity / Lack of Transparency
• Different Saving Goals
• Spending Goals
• Priorities (family time vs work)
• Requests for Assistance from Family and Friends
• Financial Enmeshment (involving children in adult financial decisions)
• Undue influence, control and abuse (exerting control on financial decisions when the other spouse controls the income)

Question 8

Conflict Resolution

Answer 8

• What should a CFP do?
  ○ Remain nonjudgmental (do not take sides)
  ○ View all parties as EQUAL
  ○ Referral to a licensed therapist or mental health expert
  ○ Possibly defer meeting with emotions are running to high

Question 9

Motivation of Decision Making

Answer 9

Question 10

Choice Architecture

Answer 10