According to The National Mental Health Commission’s most recent “report card”, the cohort of Australians who find dealing with money stressful and overwhelming is on the rise. It found the proportion of people finding it “difficult” or “very difficult” to cope on their current income doubled from 17.1% in November 2020 to 34.6% in January 2024, while women consistently reported more financial stress than men.
The study also found that the steady rise in financial stress is mirrored in the proportion of people in Australia delaying mental health care due to cost in the last four years.
It’s younger generations, the report concludes, who continue to report heightened psychological distress and financial stress, and have a much higher prevalence of mental health challenges relative to the rest of the population.
While much of this can be attributed the pressures of modern living, those facing mental health, drug, alcohol and/or gambling addictions can unwittingly be responsible for their own financial downfall.
In light of this data, Azzet has provided some guidelines for seeking help from planners about your financial distress without forcing them to cross the Rubicon into the no-go areas of mentor or mental health.
Can financial planners help?
Admittedly, financial stress, and what’s driving it, is a difficult area for financial planners to straddle with clients.
While having your financial ducks in order can make life less stressful, Wayne Leggett principal with Paramount Financial Solutions, says would-be clients need to realise that a financial planner is not a healthcare professional.
Despite their best interests, financial planners can get themselves into a lot of trouble if they’re construed to be offering advice of a mental health nature.
However, there are ways to broach the subject, suggests Wayne Leggett principal with Paramount Financial Solutions, by focusing on the financial implications, rather than the cause of the afflictions themselves.
Given that most planners have no professional credentials on which to offer advice on mental health issues, Leggett says they clearly have no legal obligation to do so.
However, what planners do have, adds Leggett is an ethical responsibility to enter into adult conversations about what’s going on.
The financial implications
Based on Leggett’s experience, what can serve as a gentler segue into these uncomfortable issues is a planner’s obligation to address the financial implications resulting from whatever behavioural issues a client might be enduring.
It is one thing to pick up on tell-tale signs of drug or other vices – namely serious cash-burn – yet quite another, admits Leggett to do anything about it.
“A client’s non-verbal signals may suggest that something’s not quite right, and that’s especially evident if a long-standing client is behaving out of character,” Leggett told Azzet.
Should financial planners be surrogate mentors?
If a research study into the well-being of Australian financial planners is any guide, they may need as much, if not more, help in the mental health stakes than their clients.
A 2021 study sponsored by leading life and health insurer AIA Australia, found that 73% of respondents are experiencing high levels of burnout from stress, while 67% experience some level of depression – ranging from 'a little of the time' to 'all the time'.
The study concluded that regulatory and compliance demands were the number one source of stress in their work lives.
Given the heightened levels of stress financial planners experience, Leggett suspects they’re probably better placed to observe it in their clients.
The key to helping those with the mental fallout from financial distress, added Leggett is how financial planners act on the observations they encounter.
What triggers can a planner pick up on?
Other indications of emotional stress, leading to financial stress that planners can pick up on, suggest Leggett include any notable lifestyle changes.
These may include a cessation of planned holidays - which were previously a regular occurrence - spending exceeds income, any friction between family members, clear evidence that partners aren’t talking, prolonged workplace absenteeism, difficulty paying bills, or a reluctance to be up-front and honest.
“Planners may recognise some of the symptoms of financial stress, yet as a profession, we are not responsible for a client’s afflictions,” says Leggett.
“Anyone who assumes the role of mentor and hangs out a shingle accordingly is asking for a problem.”
Focus on financial fallout
Leggett recognises the complexities associated with crossing the Rubicon from financial to mental health matters with clients, and warns client and planner alike, to know when they’re entering a danger zone.
However, one option for ‘touching lightly’ on any sensitive issues, adds Leggett is potentially putting it on the table and addressing it early.
He suspects any planners who do struggle to put these issues on the table probably don’t know their client as well as they thought they did.
Given that a client’s financial circumstances can go downhill along with their mental health, he says planners who don’t have a good snapshot of a client’s circumstances, will ultimately compromise the primary purpose for which they’ve been hired.
It’s fundamentally the job of any financial planner to act in the best interests of their clients.
“It’s the financial consequences that planners should focus on. You can ‘lean into’ these sorts of issues by asking if there’s anything compromising your ability to deliver what you’re there to do – namely provide value within the underlying financial advice,” says Leggett.
Equally compromising, adds Leggett is the inability of planners to set a clear line in the sand between friend and client when such matters occur.
Another tip for indirectly getting these sorts of issues on the table, says Leggett could be to recommend a budget review to see where discretionary spending could be tightened up.
