One on One: "Clients want and demand a relationship with their financial adviser"

Thomas Manheim will never forget the moment he decided to transform himself from stockbroker to money therapist.

He was watching his 9-year-old son get thrown 15 feet into the air after being struck by an automobile while out for a bike ride.

“I didn’t know what I was going to do,” Mr. Manheim says of that moment in January 1999. “But I knew I was going to do something different, something that would be more of a service.”

Fortunately, his son, now 14, was unscathed by the accident.

But Mr. Manheim was changed.

Soon after the accident, he ditched an 18-year career as a stockbroker to put his newly acquired skills as a licensed family marriage therapist to work. In 2000, Mr. Manheim self-published “Money & Soul,” a book that aims to help people find a comfortable balance between spirituality and materialism.

Today, Mr. Manheim talks about money and spirituality with the zeal of a religious convert. While working toward a doctorate in psychology, he has built a practice that is focused exclusively on helping people get to the root of their dirty little financial secrets.

“Money is still a taboo topic,” says Mr. Manheim, whose firm, The Love of Money Inc., is based in Solana Beach, Calif.

“For a lot of Americans, materialism is our god,” he says. “We believe that when we have enough money, all our problems will be taken care of, and we will be happy.”

By helping people assess their relationship with money, Mr. Manheim hopes to help them confront their misconceptions, such as the notion that more money means more happiness. He also aims to teach them how to use their money to fulfill their passion.

While some might dismiss his ideas as too “touchy-feely,” Jeffrey R. Lauterbach, chairman and chief executive of The Capital Trust Company of Delaware in Wilmington, which offers personal-trust services through advisers, says Mr. Manheim is on to something. More advisers, Mr. Lauterbach says, are starting to realize the benefits of a more emotional relationship with their clients.

“Not considering your clients’ feelings about finances is like operating with one arm,” he says.

Q What is a money therapist?

A A money therapist is someone who meets two criteria. No. 1, they have managed money for other people, so they know the gut-wrenching experiences of what losses are like and what it is like to have people project things onto you. No. 2, a money therapist is someone who is licensed as a therapist and understands how to work with the intricate inner parts of people’s psyche.

Q Aside from your son’s accident, what made you decide to become a money therapist?

A At about the 10-year-point in my career, I started realizing that a lot of the work I was doing as a financial adviser related to my clients’ money issues or their relationship to money. I saw a lot of patterns that I needed to get them to work on if they were going to behave like rational investors.

Q Why do you no longer manage money for other people?

A I think there’s a conflict of interest if you are advising someone on what to do with their money and also working with their insides. It gives you an unfair advantage.

If I was a licensed family therapist, and I was also running your money, I would be able to see a lot of your motivations. I would also understand what I could do to get you to do what I wanted.

Q What kinds of issues do you address in your practice?

A I work with people in either trying to find out how they can use their money so they can be happier in their lives or to help them find out how to … accomplish the dreams they have for their life.

Q What about people who don’t have much money?

A I don’t work so much with people who don’t have money or are in tremendous credit debt.

Q But don’t those people have “issues” that may also be worked out through therapy?

A Absolutely. The problem is that it’s time consuming, and it takes a lot of time and diligence on the part of the therapist to work through those.

Q Can’t any therapist talk about money problems?

A Most therapists haven’t done their own work [with regard to] money. They don’t understand it to the degree that I would, having spent a great portion of my life just following the markets. Also, they might be uncomfortable because they don’t necessarily have their own financial house in order. So what happens is, there might be some countertransference, with the therapist putting their stuff about money onto the client.

Q What kind of psychological issues did the bear market raise?

A That 40% to 70% drop in the market created a lot of denial. People would not open their statements or take their brokers’ telephone calls. I also saw a lot of clients really start to question what they were doing with their lives.

Q Are you starting to hear more optimism now that the market has rebounded to some degree?

A I am, and it’s a concern to me. The two emotions that are attached together are greed and fear. What is happening is that people are starting to leave the fear-based side and jump directly into the greed-based side. The trick is to find balance.

Q But how do you do that?

A Part of it is paying attention to your soul. By that I mean what truly makes you happy in your life, not the exterior possessions.

Q Where do advisers fit in?

A As much as I know about money, I have a financial adviser. I pay a full-service financial adviser to help me stay abreast of what’s going on in the marketplace because I don’t have time to do that.

Q Is there a tension that must be maintained to provide advice that empowers clients to make their own financial decisions?

A Yes. The problem is that we, as investors, want to dump everything on advisers. When things are going well, it’s always the client’s idea. But when things fall apart – like they have for the past three or four years – all of a sudden, the financial adviser is a bad person.

Q Is there any way for advisers to avoid this trap?

A As a financial adviser, the best thing to do is have your client create an investment policy statement. They should actually design it themselves. That way, they would have to take responsibility for being part of the decision-making that goes on.

Q Even though financial advisers are supposed to understand their clients’ financial lives, are they really successful in getting clients to open up about their finances?

A I don’t think they do. Most clients hold back because they don’t want to share everything with one person.

First of all, it’s not the fault of financial advisers. They haven’t been trained on how to do this. Most advisers will open a dialogue saying something like, “For me to work with you the best I can, I need to understand where all your money is.” You can’t start with that line. What you need to start with is something like, “OK, can you tell me a little bit about the belief systems around how your parents handled money?”

Q What do you say to people who say all this “touchy-feely” stuff is hogwash?

A They should put themselves in the situation of a client. Clients want and demand a relationship with their financial adviser, one that is almost as if they are a member of the family. If you are a fact gatherer, you are simply a role player in your clients’ lives – no more important than the accountant or an attorney.

Q Why do so many advisers have problems achieving that level of trust with clients?

A The biggest problem is that we feel uncomfortable. The client reads that from us and starts to clam up.

Q Do advisers need to work on their own money issues?

A They need to know what their own values are, their own beliefs. They need to know whether there are any secrets that they still carry to this day. For many financial advisers, a great deal of our self-worth is still tied to how much money we make.

Q Is there such thing as a bona fide financial dysfunction?

A I am actually writing a paper that proposes we include financial problems as a topic of discussion in the “Diagnostic and Statistical Manual of Mental Disorders.”

Q Why?

A Right now, most therapists are scared to death of the topic of money. They haven’t been trained. If the medical model actually promoted people working on financial problems in therapy, it would allow most clients a feeling of being OK about having a problem.

SNAPSHOT

Thomas Manheim, 46, money therapist at The Love of Money Inc. in Solana Beach, Calif., since 2000

Career: 1992-2000, senior vice president in San Diego with PaineWebber Inc. of New York; 1982-92, San Diego-based senior vice president of investments with Smith Barney Inc. of New York

Education: bachelor’s degree in business from The Citadel in Charleston, S.C., 1979; master’s degree in psychology with an emphasis on counseling from the University for Humanistic Studies in Del Mar, Calif., 1994