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In researching financial dependence for last week's column, I realized this money disorder shares similar characteristics with dependent personality disorder as defined in the Diagnostic and Statistical Manual of Mental Disorders (DSM-5). If you think a client may be affected by financial dependence, you may gain some insight from my adaptation of the eight criteria for dependent personality disorder outlined in the DSM-5. The criteria are if a client:
1. Has difficulty making every day financial decisions without an excessive amount of advice and reassurance from others.
2. Needs others to assume responsibility for the financial aspects of your life.
3. Fears losing support or approval if you express or confront financial disagreements with others.
4. Has difficulty initiating financial actions or doing financial tasks on your own.
5. Goes to excessive lengths to obtain financial reinforcement and support from others.
6. Feels uncomfortable or helpless when alone because of exaggerated fears of being unable to financially care for yourself.
7. Urgently seeks another financial professional as a source of care and support when a current relationship with a financial professional ends.
8. Is unrealistically preoccupied with fears of being left to make financial decisions for yourself.
If someone answers "yes" to at least five of these, they are probably financially dependent.
Research additionally shows that people with dependent personality disorder are drawn to others with narcissistic, histrionic, borderline, or antisocial personalities – those classified in the DSM-5 as "cluster B" disorders. These people are more erratic, live for drama, need to be in charge, and crave praise and high regard. A romantic or professional relationship where one partner has dependent personality disorder and the other has a cluster B disorder is a match initially made in heaven that usually results in a descent into hell.
Exploring this topic led me to pose a question that I have never seen raised: "Are financially dependent personalities drawn to financial advisors who exhibit cluster B personalities?"
Those would be advisors who view themselves as financial gurus, have "the answers" for their clients, demand loyalty and compliance to their recommendations, willingly take charge of client’s financial lives, are often market timers (addicted to drama), and crave the attention and adoration of their clients.
Such an advisor seems a perfect match for a financially dependent client. They are willing to assume responsibility for the client's financial life, offering unlimited advice and reassurance. Their taking over the financial decision-making helps calm the anxiety and fears of the financially dependent client. All the client needs to do in return is give the advisor complete compliance, adoration, and attention.
All is well – until the client questions any recommendation. This is inevitable because of the cluster B advisor’s inability to be open to new data or research that may suggest a long-held financial belief or practice is no longer accurate.
Such an advisor will over-react to a client's questioning their advice or choosing not to follow it. Seeing this as a loss of control, they may try to regain control by passive-aggressive sulking, manipulation, rage, gaslighting (questioning your sanity or making the situation your fault), or other erratic behavior.
If a client ever finds themselves in such a situation, the best outcome is having the advisor suddenly drop them as a non-compliant client, with no explanation or closure. This would leave the client with two choices: Follow the path driven by their financial dependency, seeking out a new cluster B advisor and starting the process all over again; or seeking help to resolve the underlying causes of their financial dependency, taking the more challenging but more rewarding road toward recovery.
Rick Kahler, MS, CFP®, CFT-I™, CeFT®, CCIM, is founder of Kahler Financial Group, a Rapid City, SD-based fee-only Registered Investment Advisor.
Read more articles by Rick Kahler