The purpose of this study was to measure the psychological impact of the 2008 financial crisis on financial planners. Recent surveys of financial advisors have confirmed a fundamental shift away from strategic management in favor of tactical management, with planners reporting having had made on average 2.15 adjustments in the past 12 months to take advantage of market changes (FPA 2012 Trends in Investing Study, 2012), and 83% of financial planners planning to make at least one tactical adjustment within the next three months (Veres, 2012). This article explores the psychological impact of the 2008 financial crisis on financial planners, measuring symptoms of posttraumatic stress and related changes in belief systems as a result of the crisis. In the months following the 2008 crisis, 93% of the planners surveyed reported medium to high levels of posttraumatic stress. We hypothesize that while the acute psychological distress has diminished the cognitive changes have persisted and may ultimately put the financial health of clients at risk.
Klontz, Bradley T. and Britt, Sonya L.
"Tactical Asset Management or Financial Trauma?: Why the Abandonment of Buy-and-Hold May be a Symptom of Posttraumatic Stress,"
Journal of Financial Therapy:
2, Article 1.
American Psychiatric Association. (2000). Diagnostic and statistical manual of mental disorders DSM-IV-TR Fourth Edition (Text Revision). Washington, D.C.: American Psychiatric Association.
Chemtob, C., Roitblat, H. L., Hamada, R. S., Carlson, J. G., & Twentyman, C. T. (1988). A cognitive action theory of post-traumatic stress disorder. Journal of Anxiety Disorders,2(3), 253-275.
Cicchetti, D. V. (1994). Guidelines, criteria, and rules of thumb for evaluating normed and standardized assessment instruments in psychology. Psychological Assessment, 6(4), 284-290.
Coffey, S. F., Gudmundsdottir, B., Beck, G. J., Palyo, S. A., & Miller, L. (2006). Screening for PTSD in motor vehicle accident survivors using the PSS-SR and IES. Journal of Traumatic Stress, 19(1), 119-128.
Financial Planning Association/Financial Research Corporation. (2007). FPA/FRC financial planners and asset management trends: A review of how financial planners manage client assets. FPA Press.
Financial Planning Association 2010 Trends in Investing Study. (2010). Journal of Financial Planning.
FPA 2012 Trends in Investing Study (2012). Journal of Financial Planning. Unpublished raw data.
Florian, A. (2009, July). Are You Okay? Financial Planning Magazine. Retrieved from http://www.financial-planning.com/fp_issues/2009_7/are-you-okay-26631301.html
Foa, E. B., Ehlers, A., Clark, D. M., Tolin, D. F., & Orsillo, S. M. (1999). The posttraumatic cognitions inventory (PTCI): Development and validation. Psychological Assessment, 11, 303–314.
Horowitz, M., Wilner, N., & Alvarez, W. (1979). Impact of event scale: A measure of subjective stress. Psychosomatic Medicine 41(3), 209-218.
Horowitz, M. (1982). Stress response syndromes and their treatment. In L. Goldberg and S. Breznitz (Eds.), Handbook of stress: theoretical and clinical aspects (pp. 711-732). New York: Free Press.
Joseph, S. (2000). Psychometric evaluation of Horowitz's Impact of Event Scale: A review. Journal of Traumatic Stress, 13(1), 101-113.
King, R. (2009, January-February). FPA members feel stress, see opportunity in market turmoil. Practice Management Solutions, 1-2.
Kitces, M. E., & Solow, K. (2010). The emerging trend of tactical asset allocation. In Trends in Investing Special Report. Journal of Financial Planning, 23(6), 30-31.
Klontz, B., & Klontz, T. (2009). Mind over money: Overcoming the money disorders that threaten our financial health. New York, NY: Broadway Business.
Mueller, J., Moergeli, H., & Maercker, A. (2008). Disclosure and social acknowledgement as predictors of recovery from posttraumatic stress: A longitudinal study of crime victims. The Canadian Journal of Psychiatry, 53(3), 160-168.
Scaer, R. C. (2005). The trauma spectrum: Hidden wounds and human resiliency. New York, NY: W.W. Norton & Company.
Solow, K., & Kitces, M.E. (2006). Understanding secular bear markets: Concerns and strategies for financial planners. Journal of Financial Planning, 19(3), 60-69.
Startup, M., Makgekgenene, L., & Webster, R. (2007). The role of self-blame for trauma as assessed by the Posttraumatic Cognitions Inventory (PTCI): A self-protective cognition? Behavior Research and Therapy, 45, 395-403.
Strauss, A., & Corbin, J. (1998). Basics of qualitative research techniques and procedures for developing grounded theory, 2nd edition. Thousand Oaks, CA: Sage Publications.
Sundin, E. C., & Horowitz, M. J. (2002). Impact of event scale: Psychometric properties. British Journal of Psychiatry, 180, 205-209.
Veres, B. (2012). True cost of tactical management. Financial Planning, 1-2. Retrieved from http://www.financial-planning.com/fp_issues/2012_01/true-cost-of-tactical management-bob-veres-2676548-1.html?pg=1
Vessenes, K. (2008). Advisers can work less, be health and make more money. 2008 Health of Advisers Press Report, 1-20.
Zoellner, T., & Maercker, A. (2006). Posttraumatic growth in clinical psychology: A critical review and introduction of a two component model. Clinical Psychology Review, 26, 626-653.