The Psychology of Financial Planning


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By Co-Founder & Chief Evangelist Brent Weiss, CFP®, ChFC®

The Missing Link to Living Well

The CFP Board, the governing body for CFP® Professionals, recently announced that it is updating its Principle Knowledge Topics (more on this below) to include the Psychology of Financial Planning. At Facet Wealth, we applaud the CFP Board for its continued efforts to elevate the standard of advice in the industry.

We believe that unbiased, personalized financial advice is essential to living well, and psychology is often the link between the advice provided, the actions taken, and improved well-being.

Learn more about the Principle Knowledge Topics, the highest level of professional education in the industry, at the CFP Board’s website.

What is the Psychology of Financial Planning?

According to the American Psychological Association (APA), psychology is defined as “the study of the mind and behavior.” Psychology is about understanding how we think, what drives our emotions and feelings, and ultimately why we behave the way we do.

How does this apply to your financial plan? Think of it as the story you tell about money. It’s the WHY behind the financial decisions you make. It’s the process of understanding what money means to you and to your life, how you feel about financial decisions and the emotions that govern them (fear, security, joy, sadness, excitement, just to name a few).

Psychology Integrates Your Life, Your Beliefs, and Your Money

In my career as a CFP® Professional, I have found that different people will make different choices in similar situations. Why? Our life experiences, from childhood to today, all affect how we think, feel, and act when it comes to our money.

Should you invest more or pay down your mortgage? Should you save more for retirement or for your son’s or daughter’s dream college? The right answers are about more than returns. They need to include your attitudes towards debt, your feelings about risk, and the value you place on an education.

Both of these examples require a more integrated approach to planning than those that have historically looked at just your money. It requires an understanding of you. It is the only way to develop a truly personalized financial plan.

Living well and achieving financial wellness require a multi-faceted approach that looks at your life, your beliefs and values, and your money. The psychology of financial planning is a critical component to a truly integrated approach — a plan that looks at your entire life, not just your money. The CFP Board has now made this the standard for CFP® Professionals. We believe it should be the standard for the industry.

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Facet has provided education on the psychology of financial planning to our CFP® Professionals for several years now. I guess you could say we were ahead of the game on this one.

Building Financial Planning as it Should Be

Personal financial advice should be just that, personal. And The Psychology of Financial Planning is an essential part of getting to know you so your plan can reflect you. As the CFP Board raises the bar for what competent and ethical advice is, Facet will continue to be a leader in building financial planning as it should be – unbiased, personalized and integrated into all facets of your life. We will always be advocates for our clients, and for consumers in general, and will fight to elevate the standard of care and advice that people expect from the financial services industry.


To learn more about our partnership with the CFP Board and our scholarship initiative, check out the Facet Wealth Scholarship for Increased Diversity in Financial Planning.

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