Exploring the Differences Between Financial Therapy, Counseling, and Planning with Dr. Kristy Archuleta and Dr. Sonya Lutter

Financial planning, financial counseling, and financial therapy are separate but complementary financial services designed to support clients' financial goals and well-being. But how do you know which service you, or your client, needs at any given moment? In this episode, we're joined by two leaders in the financial therapy space, Kristy Archuleta & Sonya Lutter.

Kristy and Sonya share their research, knowledge, and experience across financial services to help our listeners answer this question and more. We talk about creating boundaries, knowing limitations, and, most importantly, building a strong referral network in order to best serve our clients.

Show Notes:
1:48 Planning vs. counseling vs. therapy
6:34 Do you need to be certified to practice Financial Therapy?
12:41 All about dual designations
15:15 Building a strong referral network 
18:31 Into their research and major findings
22:21 Where to find their research
26:09 Final 2 cents

Show Note Links:

Financial Therapy Association 

Become a Financial Therapist or Find a Financial Therapist

Video from Meghan Lurtz on updates for certification in financial therapy

Conference & connection with the Financial Therapy Association

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Transcript

Intro: 0:02

Welcome to Real Money, Real Experts, a podcast where leading financial counseling and coaching experts share their stories, their challenges, and their advice for helping people manage money in the real world. I'm your host, Rachael DeLeon, Interim Executive Director of the Association for Financial Counseling and Planning Education®, or AFCPE®. And I'm your cohost, Dr. Mary Bell Carlson. I'm an Accredited Financial Counselor®, or AFC®, and the CEO of Carlson Consulting. Every episode, we're taking a deep dive into the topics that personal finance professionals care about: helping clients, building community and your professional growth. Today, we are joined by two guests and long term friends of AFCPE Sonya Letter, and Kristy Archuleta. Sonya is a researcher, financial planner and marriage and family therapist. She worked in higher education for 15 years while spending her last several years in administration. Most recently, she works in the private sector, designing training and research for financial planners. Christie is a professor of financial planning at the university of Georgia, and she's the co-founder of the financial therapy association and journal of financial therapy. She also helped found the financial behavior keynote group and women managing the farm. Dr. Arch has garnered national and international attention as a speaker and author who has published numerous scholarly articles. Co-edited two books on topics related to financial planning, financial therapy, financial counseling, and mental health. Both women are leaders in the profession of financial therapy, and both have had a tremendous impact in my life, personally, Sonya and Christie. We're so glad to welcome you to the show today.

Kristy Archuleta: 1:44

Thank you so much. It's gonna be a fun time.

Sonya Lutter: 1:46

Yes, it will.

Rachael DeLeon: 1:48

So when it comes to the field of personal finance, there is oftentimes a lot of confusion and that confusion isn't just among individuals and families who are seeking help, but also amongst financial professionals. So I'm hoping during our discussion today, we can explore the differences between financial planning, counseling, and therapy, kind of define some of the key designations and help provide a little bit more clarity for listeners about who to turn to in a time of need, or when they have proactive future planning to start us out. And whoever wants to take this first, I'm curious, how do you define financial counseling, financial planning and financial therapy?

Kristy Archuleta: 2:30

Well, I'll take an initial stab at this and Sonya, if you want to chime in at any point in time, please feel free to, but financial counseling and financial planning, financial therapy, they all have a place within this much larger sector of, of financial services. And they're all a little different, but all have a, a focus. And in the end of the day, we're all focused in helping to improve clients' wellbeing. So the way I typically describe the differences among financial counseling, financial planning and financial therapy is that financial counseling is really typically focused in on shorter term financial goals, more day to date, money management types of things like budgeting, spending, saving debt management issues that are really part of a longer term plan or longer term financial goals. And so a financial counselor might be working with a client for a longer period of time where they're meeting these different shorter term goals, maybe it's to pay off debt or pay off credit cards for example, or to get a, a budget together. But that might be part of a much longer term financial plan or financial goal. Financial planning is really focused on the long term long range planning where it's comprehensive or integr taxes, estate insurance investments, retirement, all to meet those longer term financial goals and a much more holistic way than just specifically focusing maybe in on investment advice for example, but that's definitely can be part of it. Financial therapy was really grown out of the financial and mental health profession. So in particular financial planning, financial counseling, psychology marriage, and family therapy. So those are really financial therapy is really the two combined to address the psychological, the relational and the financial aspects of one's wellbeing or family wellbeing. And it's really promoting change and thinking, and feeling and behavior, or even within relational dynamics and utilizing therapeutic approaches that have evidenced behind them to support them, to create those changes that clients need in order to be successful within their financial plans.

Sonya Lutter: 5:08

I liked that, and maybe I'll just summarize it down to financial counseling for me is a little bit more reactive in nature. Whereas financial planning is a little bit more proactive building upon what you've already said, and we've come a long way in both financial counseling and financial planning with the integrating family and relational elements into practice. But financial therapy is very purposeful in the relational integration. Doesn't happen by accident, but rather very purposeful. How is this financial situation impacting your relational system with your immediate family, with your work system, with your social system, et cetera. So I think that's everything that you've already said. Just maybe phrased a little bit differently that may resonate with people, um, a little bit differently.

Dr. Mary Bell Carlson: 6:04

Yeah, no, that's really helpful and fantastic. Most of our listeners on this podcast are very familiar with financial counseling and coaching, but we really haven't talked a lot about financial therapy. So let's dig into that a little bit more and talk specifically about certifications and registration. If someone were wanting to practice financial therapy, do they have to have a certification?

Kristy Archuleta: 6:27

So financial therapy in a general sense is not a regulated term. However, to practice financial therapy, we would hope that someone would have some certification, uh, maybe some licensure to help basically provide some acknowledgement that these people know what they're doing. So in the mental health world, which is really very different than the, the financial profession, just in many different aspects of it, but in particular, within mental health therapists, for example, a licensed marriage and family therapist, like both Sonya and I are, or a licensed clinical psychologist, those mental health professionals are licensure by state government state regulation, where our financial service providers are certified by a body organization. So financial therapist is not regulated by, at, at a government level, but there is a certification that you can complete to become a financial therapist. And so I'll talk a little bit about that. I, I have the privilege to sit on the certification committee for the financial therapy association, which is the host of the certified financial therapist certification. And so it is going undergoing some changes. You'll see that some of those changes coming out probably at the end of the year. And there is a very recent update that was done by Dr. Megan LZ, who is the, our immediate past president of the financial therapy association. She also heads up our certification committee talking about these updates as someone wants to go and watch that. Um, she did a webinar a few weeks ago on the, the updates. And so that's on the, the website, the financial therapy association.org website, but within the, the certification currently, we have three levels. It's the certified financial therapist level one, which is the active certification that you can get. And you can complete, this is really an educational certification. It doesn't give you a free pass to go practice financial therapy as defined by the financial therapy association. It says that you have knowledge and you have competency and understanding these different elements and aspects of what financial therapy is. You have the ability to recognize what is going on within clients and families. And then level two is proposed as a practice certification where someone will be certified to actually practice in financial therapy. And so previously we have looked at financial therapy as coming from primary disciplines of financial planning or financial counseling or marriage and family therapy. And you're integrating it into your current, your primary profession. Now we're moving more towards let's think about financial therapy as something that is new, that is, is being created. So that it's a little different than just from your primary profession that you're tacking on. Now, I work with money issues too, for example, or now I work with relational family, relational or psychological issues, or really thinking about this as being like, this is something that is in and of itself, a profession moving forward. There is a third level that, um, looks a little bit different on the current website will, will eventually turn into a supervisor designation. And so all of these, um, well, I should say that the second level, which will likely be called just a certified financial therapist has a number of hours that you would have to complete within financial therapy. So practical hours that will need a certain level of supervision for those hours. And so there will be another level of certification that's for the supervisor. So what you see on the website right now is a little bit different than what is coming and what's in the process of happening currently. Currently you can still move forward with a certified financial therapist level one, which is that educational certification. Um, and the level one will pretty much look the same moving forward. It might just get a, a slight name change. So hopefully that is just as clear as mud can be.<laugh>

Dr. Mary Bell Carlson: 11:04

I do wanna dig a little bit deeper for our listeners too, and find out Sonya, can you help me understand if you have to be registered as an investment advisor or a therapist or both to practice as a financial therapist?

Sonya Lutter: 11:17

No, you certainly don't. And I feel very strongly about certifications, but I think we need to remember that there's really two primary purposes for any of these registrations or licensures or certifications. One is for our own self to demonstrate our competency, to feel confident and knowledgeable in a particular area. They also serve the purpose of signaling to consumers that there's some baseline level of knowledge or agreement to some sort of code of ethics. And when we are going out and filing to be a registered investment advisor or, or a financial therapist, or a certified financial planner professional, are we doing it for ourselves to gain that knowledge and that competency? Or do we really just wanna have those letters and try to use it as more of a marketing game? If it's the former, I think that's what we need to stay focused on. Becoming a financial therapist is just, it's not something just to add on for our financial counselors, but it's a different way of practicing. And it's a very wonderful thing to pursue. If in fact, you want to gain that knowledge and go through those experiences that Christie highlighted so comprehensively for us.

Rachael DeLeon: 12:41

Yeah. That kind of goes into my next question, Sonia, um, in terms, you know, Christie mentioned a lot of people have maybe come into financial therapy from a financial counseling background or a financial planning background or through education within personal financial planning. I'm curious, what would you say to professionals who are interested in dual designations and what is some of the value behind that?

Sonya Lutter: 13:07

Well, it certainly extends your ability to communicate and potentially even relate with clients, um, because it's just going to broaden your competencies and you're going to know more of those relational elements that might be going on. What comes with that is also the greater tax affiliated with holding all of this knowledge and recognizing where the boundaries are. So as a financial therapist, perhaps you're willing to dig a little bit deeper into past trauma or maybe some sort of addiction type issue. And your primary role is a financial counselor. It's wonderful that you have that knowledge and that you can guide a client and really understand some of the behavioral elements that's going on with that client. But you also have to recognize that you are not a drug counselor. And at some point, if you're looking at an addiction issue such as gambling or something else that there is an end line to where there's still a different referral process that needs to happen. So I think it's good and a lot of ways to have these multiple certifications, but it also creates more of a burden for the professional to recognize where the boundaries lie.

Dr. Mary Bell Carlson: 14:30

Absolutely Sonya. I remember even being in practice at times and recognizing when I had someone with maybe a gambling addiction or a hoarding addiction and things that I knew were outside of my scope of practice was immediately when I needed a referral network. And I knew that I had to have somebody who was able to help me beyond my own skills and expertise. And to me, that's what a lot of this certification and even education around this topic is about, is knowing what your own boundaries are and your own limitations are. And when you need to refer out just like in a financial planning world, I would never be able to write a will or any kinda legal documents for a client. That's also true in the mental health world that you need to know your boundaries to be able to have a referral to send out. So as a follow up to that, I'd like to know your advice for how do you build a strong referral network in this field of mental health?

Sonya Lutter: 15:29

It seems easy, right? Just go out or interview a bunch of professionals. And, and there you have your referral system, obviously it's not quite so easy. Uh, the financial therapy association has done a really fantastic job of developing that referral system for you. If you go to their website, they have, I believe it's still called the FTA network and you can go and you can search for people who have more of a background in mental health. So that would be my first recommendation is to go to a place that's already been vetted to a certain extent, but also word of mouth. It's powerful as a consumer. And it's also powerful as a professional, your clients. If you are willing to have these conversations with them, they're probably going to start volunteering information or saying, oh yeah, my therapist. So, and so said this, and you don't need to mention that your client Susie told you about this therapist and Michael should go see Susie's therapist too, but you make this mental note of, okay. Some of my clients have had good experience with this mental health professional and doing a little bit more background work on that therapist yourself outside of the client session, I think is another really good way of just starting to learn from people you trust and that are working with the exact same population.

Rachael DeLeon: 16:53

I love that. And I, you know, it reminds me when you mention, if you're a financial planner or financial counselor to check out trusted resources like the financial therapy association. And I think, you know, what a good reminder, whether you're someone who's just starting out in the field organizations like financial planning association or X, Y P N, it's a really great network for finding financial planners or a F C P E you know, to find financial counselors and how do we connect newer financial professionals with those networks to start building those relationships and to begin understanding that they're not competitive communities, they're really supportive communities to help meet your client where they're at.

Sonya Lutter: 17:37

Absolutely. I think that's really key thinking of it, not as competition, but these are our colleagues.

Kristy Archuleta: 17:43

Yeah. And it can seem really overwhelming to start building that network. But, but interestingly enough, mental health professionals are very, oftentimes they're very intimidated by financial services as well, financial professionals, and don't understand really how they can work together. Um, I even had a professor at one point in time say, I don't understand how these two connect. So<laugh> so mental health professionals are not being trained in their own training programs to work with financial issues. So what I'd like to remind financial professionals in particular is that mental health professionals really need you just as much as you need them to help with your clients. Really the goal is to improve their overall wellbeing.

Dr. Mary Bell Carlson: 18:31

Both of you are prolific researchers in the field of financial planning, as well as financial counseling and therapy. And both of you have numerous publications. Would each of you tell us a little bit more about your areas of research and some of the major findings from it?

Sonya Lutter: 18:45

I'll start this time. I love talking about research and there is so much to be learned from the financial therapy research on both sides for financial counselors and mental health professionals and financial planners. So some of my favorite work that I have done looked at money, arguments and divorce, it's commonly thrown out there that money's the number one cause of divorce. This is not technically true. Uh, money arguments are in fact, the number one source of conflict for couples. But what I found with this longitudinal research was that the amount that a couple argues about money at the very beginning of their relationship is more predictive of later relationship satisfaction than an increase in arguments or the amount that they're arguing about money at that point in time. And this, when you sit back and think about it is so absolutely huge, we have such an opportunity to work with our young couples and help them, their values and their goals about money. That's what I think all of this boils down to is a lack of communication or, uh, maybe misalignment with personal values and how that relates to their leader, financial goals. And that just compounds over time. The amount that a couple argues about money is predictive of divorce. But some of these other things that we commonly know to be affiliated with divorce are much more important, like being younger when you were married or having more children, being less likely to divorce money is important in relationship satisfaction and in predicting divorce, but more so in relationship satisfaction. So I think that's really big to think about the impact we could have, particularly with premarital financial counseling, what a fantastic avenue for financial counselors, to be able to provide some services to either clients or children of clients in that regard. Some of the other research that I really enjoy doing is related to physiological stress and some of the few may have read some of it. And the a F C P newsletter, it's been about a decade ago now, but it was work. I did with John Gable at university of Georgia. And we looked at client stress level related to the office setup, ripe opportunity to reproduce some of this with more virtual settings. But what John and I found was that clients prefer a more comfortable setting. They want to feel like they are in a living room versus sitting across from you at a more conference formal table. And I think that my hypothesis, I have not tested this, but my hypothesis is client stress has even further decreased when they're able to sit in their actual living room versus a, a room that's meant to be like a living room at the financial planner's office. It gives them control and helps reduce their stress. And this is so important because when you are under stress, you are making decisions based off of right now. What is your emotion telling you to do you basing the off of past habits? And it's very myopically focused. So to be able to work towards any long term financial goal, we need to really have that stress level down and to be able to process information and think about the consequences of those decisions, the long term consequences of those decisions, where

Dr. Mary Bell Carlson: 22:21

Would someone find your research?

Sonya Lutter: 22:23

It's all over the place? Really? Uh, Google scholar is really my favorite thing, because then you can get to publications in multiple outlets. So if you go to Google scholar, you can just type in my name or Christie's name and you'll find us there.

Kristy Archuleta: 22:39

Yeah. I really enjoy listening to Sonya talk about her research because it's very fascinating to me as well. And fortunately, I've been able to work with her over the years on some different projects and just watch her do some of that research. My favorite research that I think that I've done that I hold dear to my heart is the work that we've done with the solution focused therapy approach and applying that probably my favorite article was about applying it to financial goal setting. And it's my favorite for actually a number of reasons because it involved PhD students, it it's involved clinical research, it's involved training. It's, it's involved a, a lot of different things and really what we are aspiring for financial therapists to be actually able to do at some point. And so solution focus therapy is an approach that is from mental health. It grew out actually out of, uh, an addictions facility in Milwaukee, and it was developed very pragmatically to utilize with clients who were struggling with, with drugs and alcohol addiction. For the most part, it was developed pragmatically because the researchers were watching what was actually working when they worked with people. And so it developed into a very strength, spaced approach that I think has a lot of across domains it's been used in a variety of domains when we think about consulting or therapy or, um, whatever. So I think it has, it has, it does have a lot of applicability for financial counseling and financial planning and how we approach and how we work with clients, how we ask them questions and, and so forth. So it has some very particular interventions and tools that, that we utilize. So in this research that we did, we applied a, an approach as a brief approach of the solution focused model and worked with clients who came into our clinic at Kansas state to help them develop financial goals. And so these sessions were only about 2030 minutes give or take, I mean, some, some sessions were a little longer and some were a little bit shorter, but on average, they were around 20 to 30 minutes. Students who were part of this project were trained to ask these questions in a solution focused kind of inspiration and how, how you actually carry that out and do that. But at the end, after over a number of years, we collected this data. And when we finally had enough, um, data points to analyze, we learned that that clients, when they were leaving after just this 20 to 30 minute session, they felt like they were less anxious. They were more likely to refer someone to a financial professional, they had higher wellbeing scores. And so there were just a number of factors that were really interesting when we think about how the small changes that clients made for themselves during that session. So we didn't do follow up sessions, um, but just that, that initial piece, but it was a foundation to help us figure out how can we start working towards some evidence based best practices and approaches with our clients in, in financial therapy. So that's my favorite.

Rachael DeLeon: 26:09

At the end of each interview, we like to ask our guests to share their 2 cents. If you had one piece of advice to leave with our listeners today, what would it be?

Sonya Lutter: 26:19

I'll start again. And I would say pay attention to your stress. It impacts so much decision making, like I said, but it also impacts relational satisfaction and how likely you are to actually follow through on your goals. And so if we can just pay attention to when we start feeling like our heart is beating faster, or when we start getting the claimy hands cold hands, ironically is one of the quickest indicators of physiological stress because it's a representation of our blood going to our heart to prepare for that fight or flight response. So when your hands are cold, it just simply means that your, your body's preparing to take some sort of action. So once you start knowing what that feels like, it helps you recognize that it's time to take a deep breath and reanalyze what's going on and come up with a logical next step.

Kristy Archuleta: 27:17

I'm just gonna kind of piggyback off of what Sonya just said, because I think taking those small steps can really lead to impactful and significant changes in one's life. And so when you can take very small, manageable steps to get to where you want to be, then you can recognize, I do have the strength to be able to do these things. I do have a commitment to do this. I am motivated to do this. I'm, I'm motivated to do more or keep doing those things that I need to keep doing. So we can't underestimate the power of making small steps towards the, what may seem like really large goals because those small steps really matter.

Dr. Mary Bell Carlson: 28:03

That's great. I really appreciate the passion that actually both of you bring to the table. I told Rachel A. Little bit earlier that you both love your research and it reverberates in your voices and how excited you get about it. And we appreciate you sharing that passion with us. Thank you for joining us on the show and please tell our listeners where they can connect with

Kristy Archuleta: 28:23

You. Sure. You can find me on LinkedIn, or you can find me at the university of Georgia. I think if you just Google, you can find my, my email, but certainly on LinkedIn, I do have a Twitter account, not super active on Twitter, but throw that out there as well. Same

Sonya Lutter: 28:41

LinkedIn is the best place. Sonya Luter L U T T E

Dr. Mary Bell Carlson: 28:44

R. Thank you, Sonya. Thank you, Christie. We appreciate your time.

Kristy Archuleta: 28:47

Awesome. Thanks everybody,

Dr. Mary Bell Carlson: 28:49

Rachel. It was really great to talk to Christie and Sonya. Again, they actually were both of my major professors as I wrote my dissertation and I worked under them while I was getting my PhD. So it's fun to go back and hear some of their stories and where they've gone in the last 10, 15 years. I remember being at the very first financial therapy association conference, and they are both leaders in this field, and I love how they are able to define clearly the differences between financial planning, financial therapy, financial counseling, because it does get so convoluted even for us as practitioners. And so it's very helpful to know really what that means as a practitioner. And it also is really good to know what your boundaries are, what your limitations are and when you need to refer out. And I think the more clarity we get around these different areas of practice, the better we can become regardless of what we're doing, right? So whether you're a financial coach or whether you're a financial counselor or a financial therapist, the more you know about these other professions, the better you can become in your own, because then you'll also have the resources and education and knowledge to be able to refer out and help others get the help that they need. And so I appreciate the fact that they come to us with these distinctions and very clear guidance of what you need to be certified or registered to practice. The other part that I just love and I smile at is listening to their research. Uh, they love it. They have been such big influences in the entire field of financial counseling and coaching and continue to be so with the research that they publish. So anyone that does not know their research or background, I highly encourage you to look more into it and find out more about how that can guide your own practice and help you with your own clients.

Rachael DeLeon: 30:37

Yeah, Mary, this one was especially a treat for me today. We get questions all the time, whether it's from the media, whether we hear it from clients and even amongst professionals in different, you know, capacities at conferences, there is so much confusion in the field across financial counseling, financial planning, and financial therapy. And this idea of, you know, where does one begin? Where does one end? How do they intersect? And this feeling that there's this scarcity idea that there's not enough space for everyone. And the truth is the more that these professionals worked together, the better our clients are served. And I think Christie and Sonia did such a nice job of defining the nuances between them and really offering some different ways and opportunities to start building that referral network. And I love Sonia's well, both of them, honestly, they're zest for lifelong learning. And I, you know, I think, I think it was Sonia that mentioned it, but, you know, as people go out and they invest in whether it's certification or training or classes, not only doing for your clients, you know, from a, from an ethical standpoint and a credibility standpoint, but most of all, what it's doing for you as a practitioner and what it's bringing to your work in the field. And so just such an important conversation. I hope people listen in today. I hope we continue the conversation, you know, a great place to do that is at the a F C P symposium this November. So for all that are planning to make the trip to Orlando, Florida. You know, these are the types of conversations and the types of network and people that you meet will also have a virtual opportunity as well. So we hope you'll consider joining us this November, if not, you know, just check in with the AFC P community, listen to our podcast, engage with us on our connected community. We love hearing from you. If you have ideas for show episodes in the future, reach out to us, continue the conversation. We'll see you next time.