FinTok with Dr. Brad Klontz, Episode #46

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Today’s guest is Dr. Brad Klontz Co-Founder of the Financial Psychology Institute. He’s also an Associate Professor of Practice at Creighton University Heider College of Business, and he’s a Managing Principal of Your Mental Wealth Advisors. Dr. Klontz was awarded the Innovative Practice Presidential Citation from the APA for his work in helping people with money and wealth issues. Dr. Brad Klontz has been a columnist for the Journal of Financial Planning, On Wall Street, and PsychologyToday.com.

In addition, he has co-authored and co-edited five books on the psychology of money. His work has been featured on ABC News’ 20/20, Good Morning America, and in USA Today, The Wall Street Journal, New York Times, to name a few. The psychology of money is something that is fascinating to me and to have the opportunity to have a conversation with Dr Klontz and share it with you, makes it even better. So be sure to listen in, because I’m sure you’ll hear some interesting things about money, wealth, and psychology and how they all come together.

You will want to hear this episode if you are interested in…

  • Dr. Brad Klontz’s path to the Financial Psychology Institute [2:45]
  • What is a financial psychologist? [5:33]
  • When or how do our ideas surrounding money develop? [6:04]
  • How much does mindset have to do with poor mental wealth? [8:42]
  • Do you have a money disorder? [12:56]
  • Why is money so complicated? [15:52]
  • What can investors do to achieve a better relationship with money? [18:29]
  • Are social posts (by unqualified people) affecting the psychology of investors? [20:57]
  • How chatter on Reddit and other social media affects investor psychology? [24:56]
  • What Brad did today that put him in the right mindset for success? [31:20]

Dr. Brad Klontz’s path to becoming a financial psychologist

Dr. Brad Klontz says his path to becoming a financial psychologist and to co-founding Financial Psychology Institute was an ugly one. Clinical psychologist was Brad’s original training—he’s still a clinical psychologist—and when he got out of college he $100k in student loan debt. Having grown up working-class his mindset was that debt is terrible, it was the only way to get through school, but he had a lot of stress around it.

Brad saw a friend make a hundred thousand dollars in one-year trading stocks. He watched his friend do this and thought, what an incredible way for me to get out of debt. He thought, my friend knows nothing about the stock market and I know nothing about the stock market, perfect match. Brad sold what he had of value, which wasn’t much, his truck that was worth the most. He took all the money and I started day trading with it. He recalls having a fabulous few months and then the .com bubble burst. It was a miserable experience watching his money disappear. Brad asked himself the question, “Why would a reasonably intelligent person do something so radically stupid with his money?” And that’s how it all began.

Do you have a money disorder?

Dr. Brad Klontz says the average American has a money disorder in the sense that they’re engaging in self-destructive financial behaviors. What’s so fascinating is that (prior to this most recent crisis) we see low savings rates and then in the midst of the crisis saving rates skyrocket. Before the great recession, we were doing incredible and the savings rates were -0.5%. Then, of course, tragedy happens and everybody scrambles around and starts saving more.

You wouldn’t think that would be the case—that you’re financially stressed and all of a sudden you’re saving more money; but we’re influenced in a powerful way by our emotions. It becomes this pattern of highly self-destructive behaviors, where we know that we should be doing something different and we can’t do it. Examples of that are gambling disorders, or compulsive buyers which is common in the United States. There are as many people suffering from compulsive buying disorder in the United States right now as there are suffering from depression. This is mind-boggling because you probably hadn’t even heard of compulsive buying disorder.

Changing your money mindset

Dr. Brad Klontz shares a couple of things that investors can do to have or create a better relationship around money. He says the first thing is understanding your family history and what stories or messages you have gotten from your culture? What gender-specific messages are instilled about money and investing? What is your family history around it? Because this is having a powerful impact on your life. So knowing your story and why you believe what you do is powerful.

The next thing Brad shared is don’t trust your instincts—at all. Whatever your impulse is, always second guess it and put time between your impulse and your behavior. He says we need to understand we’re wired to do the herd thing. Bubbles and crashes are always going to happen. It’s difficult to not get sucked into the herd mentality. We’ve seen it recently in the market and we’re always going to see it. You’re going to be watching something happening and you’re going to feel like, ‘oh my gosh, am I missing out?’ Even if you’re very rational and you have a plan, there’s going to be some doubt that creeps in your head. This is survival doubt, not a bad thing. You need to understand though, that when you feel like you’re missing out, it becomes an existential anxiety. Not necessarily greed, it’s more like fear of death. Because historically, if the tribe moved in one direction and you were standing still, you died.

Connect with Dr. Brad Klontz

Bradley T. Klontz, Psy.D., CFP® is an expert in financial psychology, financial planning, and applied behavioral finance. He’s an Associate Professor of Practice at Creighton University Heider College of Business, Co-Founder of the Financial Psychology Institute, and Managing Principal of Your Mental Wealth Advisors. In addition to Money Mammoth (Wiley, 2020), Dr. Brad Klontz is co-author/co-editor of Facilitating Financial Health (NUCO, 2008; 2016), Financial Therapy (Springer, 2015), Mind Over Money (Broadway Business, 2009), Wired for Wealth (HCI, 2008), and The Financial Wisdom of Ebenezer Scrooge (HCI, 2005; 2008).

Dr. Brad Klontz is a Fellow of the American Psychological Association and a Former President of the Hawaii Psychological Association. He was awarded the Innovative Practice Presidential Citation from the American Psychological Association for his application of psychological interventions to help people with money and wealth issues and his innovative practice in financial psychology for practitioners across the country.

Dr. Brad Klontz has been a columnist for the Journal of Financial Planning, On Wall Street, and PsychologyToday.com. His work has been featured on ABC News’ 20/20, Good Morning America, and in USA Today, The Wall Street Journal, New York Times, Washington Post, Los Angeles Times, Time, Kiplinger’s, Money Magazine, NPR, and many other media outlets and professional magazines and journals.

In 2019 he was appointed to the CNBC Financial Wellness Council and received the 2018 Montgomery-Warschauer Award from the Journal of Financial Planning, honoring the most outstanding contribution to the betterment of the financial planning profession. He has partnered with organizations including Capital One, JP Morgan Chase, Mutual of Omaha, and H&R Block in efforts to help raise public awareness around issues related to financial health and financial psychology.

Guests on the Mitlin Money Mindset Show are not affiliated with CWM, LLC, and opinions expressed herein may not be representative of CWM, LLC. CWM, LLC is not responsible for the guest’s content linked on this site.

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