Why does Financial Advice need to be Trauma Informed?

By Mary Hemingway, Fearless Financial Planning

Did you know that at least 50% of people have suffered trauma in childhood? And that the impact of that trauma can be so far reaching it has the power to change everything from the neurobiology of the brain, to health and life expectancy and also financial decision making?

Working in a trauma informed way means continuously learning about trauma and adapting your practice to accommodate people who have experienced trauma. Think of it as the disabilities act but for invisible psychological wounds, it’s the same as making sure you have a ramp or lift for wheelchair users to get into your office!

There is no rule book for being trauma informed and certainly no check list or rubber stamp, it’s a process of learning and always striving to do better for people who interact with your service- both clients and colleagues- and I believe it’s essential everyone in our industry becomes more trauma informed.

So if there is no defined checklist of actions to take and no way of knowing who is impacted then where do we even begin? As the famous Simon Sinek book teaches, let’s start with WHY.

There is very little data on the impact of trauma and engagement with professionals like Financial Advisers. However, there is evidence to suggest an increase in shame and guilt about money, prevalence of damaging debt cycles, financial impulsivity and lower financial literacy. Add to this the potential for a re-traumatising power imbalance in a financial adviser and client relationship; I posit that trauma experienced people are much less likely to want to engage with us.

Given that we all know the benefits of a using an excellent Financial Planner, we risk leaving vulnerable people to become even more disadvantaged. If even a fraction of the 50% of people who have a traumatic event feel this way then we owe it to them to try and change things and make ourselves more accessible.

If we also apply this to who we work alongside it makes even more sense to learn and adjust for the impact of trauma. If you’ve ever seen an ‘unreasonable’ reaction from a co-worker or yourself, perhaps getting incredibly angry or upset over something minor, an ‘over the top’ aversion to criticism, an inexplicable dislike for being in certain situations, you may be watching a profound trauma response in action. And until we learn and understand this there is no way to accommodate for it.

A great quote by Charles Blow sums up why we should be making our industry trauma informed:

‘One doesn’t have to operate with great malice to do great harm. The absence of empathy and understanding are sufficient’.

When we agree why we should become more trauma informed, we need to turn our attention to HOW. I’m still working on this myself to be honest, I don’t think there is ever a final destination of ‘Fully Trauma Informed’ but it’s an ongoing process of learning and doing better. I suggest starting with understanding how trauma is embedded in the brain and body – which is outside of the scope of this short article but I have put some resources at the end if you are keen to learn.

What I can say is when you begin to unlock what trauma means then you can start to make huge changes to your relationships and the lives of people around you!

If you’re keen to learn more about trauma informed financial advice then please do connect with me via all the usual channels- together we can make seismic changes in the lives of the trauma experienced.