Is There a Doctor in the House?

In my financial counseling practice sometimes I have to deliver bad news. Whether it’s showing a client how his income doesn’t support his already modest lifestyle or helping a family understand the terms of their unmanageable debt, I am there when painful economic realities are revealed, often for the first time.

My role in these scenarios is not unlike a doctor sitting down with a patient to give him a poor test result. Given this parallel I watched with interest a lecture by Elly Hann D.O. on How Best to Deliver Bad News to Patients and Family. Dr. Hann, a hospice physician specializing in palliative care and pain management, emphasized the importance of communicating bad news clearly and compassionately so that the patient is able to begin organizing his thoughts around the diagnosis and treatment plan.

Without the doctor’s effective communication, patients remain stuck in a state of anxious confusion. These feelings compromise the patient’s ability to trust his doctor and follow through with necessary treatment.

While this all seems obvious in a medical model, it really made me think about our socio-financial model and how we meet consumers’ needs for assessment (diagnosis), communication, and support.

In the medical model the doctor is the expert, the one with the information. The doctor is required to be the patient’s advocate without any conflicting loyalty. Thus the patient can trust the doctor to decide and to act in his best interest.

In the financial world, one can retain similar unbiased expertise in the form of a fee-only financial planner or accounting professional. These services are excellent but can be prohibitively expensive for all but the most affluent. Some professionals offer pro bono or reduced-fee services through local non-profits or public agencies but these programs are spotty and not scalable to the population at large.

In the absence of expert guidance what has happened is that we’ve made “doctors” out of lenders. We assume that because lenders incur risk the market drives them to become experts on how to extend credit, at what competitive terms, and to whom.

This is not a patient- or consumer-based model. This would be like a person going into a hospital with pain in his shoulder and being told by the radiologist, “Hey, what you need is an x-ray,” and then the orthopedist countering with, “But if you sign up with me now I will give you an excellent deal on this cast!” How is the patient supposed to determine what to do with something as complicated as his health?

Our financial world has become similarly complex. Many consumers feel lost, anxiously confused about how to diagnose their own needs, identify the right course of action, and organize themselves around a plan.

Anxious confusion poisons the whole system. We can see the erosion of trust in the lending establishment. Whereas once consumers put too much faith in the promise of credit, now you see people suspicious of lenders’ motives to the point where they feel the system is out to get them.

I definitely see a need for a more widespread combination of consumer advocacy, information, and support. Right now all of those functions are operating somewhat disjointedly. For example, I can provide expert communication and support in my counseling practice, but I must partner with financial services professionals to get clients the information and analysis they need. The financial services industry has the information, but is mostly geared at helping already stable people protect their security and not at being a consumer sounding-board. Consumer advocates exist, but they often take an adversarial, system-focused position that is not necessarily based on the needs of the individual consumer.

I’m writing this post as a real thought-in-progress. Our socio-financial set-up seems inadequate but I don’t know what the right answer is. It’s hard to point to the state of the health care industry as any sort of positive example, but I think that the doctor metaphor is helpful in illustrating the vacuum that currently exists. This is not generally a comment-heavy blog, but if any readers have an opinion on this I would be glad to read it.

Read full post »

My Future's So Bright, I Gotta Buy Shades

In The Secret Life of Money, Tad Crawford offers this revolutionary concept:

Keeping the symbolic value of money in mind....we can gain a new view of debt, seeing it not as merely an obligation to be paid but also as a statement about how our inner richness will be expressed in the future (italics added).

That is actually completely brilliant. Until I read that I had not heard the phenomenon articulated so clearly.

When it comes to understanding how money doesn't work in a person's life, debt is often where the narrative begins. Debt is the manifestation of some sort of imbalance, either internal or external (or sometimes both).

An external imbalance may be quite difficult but it's usually pretty straightforward. Perhaps a major life crisis affected a person's finances, or their resources are simply not adequate for their needs.

An internal imbalance, on the other hand, can be many things. It may be around self-concept, such as when you buy things to try to feel like a new person or to correct for some felt deficit. It may be around impulse, when the desire to buy something rises up and cannot be deferred. There are a million ways we might be slightly skewed in perception, judgment, mood, etc. and all of these can affect how we use money.

What I love about the Crawford quote is how artfully it captures a distortion of both self and time. It shows how debt is a way of not fully living life in the present, but rather projecting oneself forward into some fantasy future where money is more abundant (along with approval, achievement, and sex, most likely).

This more affluent future-self is perceived as the true manifestation, and the debt is simply the price we pay to express our confidence in that belief.

I see this again and again in my counseling practice. When people arrive at a point whereby they can no longer afford to sustain their debt, they experience an accompanying personal crisis. It is not that they are so attached to the things that they bought on credit. It is that their coveted future self -- who is much more real to them than the life they live in the day to day -- must be sacrificed to come to terms with the reality of their financial position.

The good news is that most people who get appropriate support through this crisis come out healthier on the other side. It's true one can amass huge amounts of debt but there is pretty much always a limit. Being forced to a financial reckoning brings many activities that are effective in re-aligning the temporal distortion and the imbalance in self-concept. Tracking spending, for example, reinforces connection to the present and helps a person to remain grounded in their life as they actually experience it.

Unless there is true mental illness, a derealized existence actually gets pretty uncomfortable after awhile. You only get one life. Spending all that "future richness" wastes so much more than just money.

Read full post »