Ethics and mental health in financial planning


When it comes to mental health there are ethical matters that should be considered as part of the planning process.

It’s a disturbing statistic. Each year, one in five Australians suffer from a mental illness; it is the third leading cause of disability burden in Australia[1]. Ethical practice underpins the financial planning process, however, there are additional considerations for those clients experiencing mental illness personally or dealing with family members who are.

In this article, Zurich explores the link between mental health and financial health, and discusses ethical matters that should be considered as part of the planning process.

Mental health in Australia

Awareness of mental health conditions and their prevalence has increased markedly over recent years, with people increasingly realising the importance of having more open discussion about these issues. Figure one illustrates the types of mental illnesses impacting the 20 percent of Australians who grapple with mental health issues in any year.


a) Persons who met criteria for diagnosis of a lifetime mental disorder and had symptoms 12 months prior to interview

b) A person may have had more than one mental disorder; therefore, the components may not add to the totals shown

c) Includes severe depressive episode, moderate depressive episode and mild depressive episode

d) Includes harmful use and dependence

Source: Australian Bureau of Statistics, file 4326

While younger Australians are typically over-represented in those suffering anxiety and depressive mental illnesses, at the other end of the age spectrum, cognitive disorders such as dementia, which includes Alzheimer’s disease, is the second leading cause of death in Australia. Together, dementia and Alzheimer’s disease accounted for 8.3% percent of all deaths in 2016, and has replaced heart disease as the leading cause of death among women. In 2016 dementia accounted for 40.9 deaths per 100,000 people, as compared to 30.7 in 2007. defines dementia as a collection of symptoms caused by disorders affecting the brain. It is not one specific disease and affects thinking, behaviour and the ability to perform everyday tasks. Symptoms include memory loss and a progressive decline in intellect, rationality, social skills and physical functioning.

In 2018, there is an estimated 425,416 Australians living with dementia. This figure is expected to rise to 536,164 by 2025 and 1,100,890 by 2056 – equivalent to 650 people per day, if there’s no medical breakthrough to halt its growth[2].

Mental health and trauma

In our last article Trauma and your practice, we examined the intricacies of working with clients who had personally experienced, or had a family member who had experienced, serious trauma. In cases like this, the entire family can be at risk of experiencing some form of mental health issue. According to the Black Dog Institute[3], approximately 10 percent of people exposed to a traumatic event will develop post-traumatic stress disorder (PTSD) in their lifetimes; of these, one third will continue to experience symptoms 30 years after onset.

Those most at risk of PTSD fall into three categories:

  1. Front line services (such as police, paramedics and fire crews)
  2. People from disadvantaged communities, who may have been exposed to conflict and violence (including refugees and the socially disadvantaged)
  3. People who have experienced trauma; road or workplace accidents, crime, natural disasters or terrorist attacks

The relationship between financial and mental health

Financial wellbeing and mental health are often linked and have a symbiotic relationship. Poor mental health can make managing finances more difficult and lead to bad decision making. Worrying about money can also exacerbate the impact of mental health issues. Clients experiencing mental illness may express their financial concerns outright, or provide certain ‘clues’ in the way they are managing their finances, which advisers should be aware of, including:

  • Your client is spending a significant amount of unexplained time away from work, which is impacting their income
  • Spending patterns change, particularly a sudden increase in spending; impulsive financial decision making
  • Clients lack motivation to keep their affairs in order, pay bills, or complete financial tasks
  • Clients don’t respond as readily to phone calls, email or post, and don’t complete paperwork or show up for appointments
  • Clients express anxiety about their finances, and even curtail spending, despite a strong financial position

The impact of mental illness on the financial health of the sufferer and their family will vary from case to case, and range from impacting the family’s income, making inappropriate financial decisions, or being at risk of financial abuse or exploitation from others, such as service providers, salespeople, family members or carers.

Ethics and financial planning

Ethical conduct underpins the financial planning industry, with the two major associations – the FPA and AFA – each having documented ethical principles to provide a benchmark for their members.

The importance of ethics in financial planning came to the fore last year with the establishment of the Financial Adviser Standards and Ethics Authority Limited (FASEA) to set the education, training and ethical standards of advisers who provide personal advice on relevant financial products to retail clients. FASEA was declared as the standards body under the Corporations Act 2001 on 13 June 2017and part of their remit will be to set a code of ethics for all financial advisers.

In a submission to FASEA, the FPA said that financial advisers would be required to study ethics and take full responsibility for updating their education, including units on ethics, to keep practising.

Ethics and mental health

With 20 percent of Australia’s population experiencing mental health issues, there is no doubt that your clients, or clients’ family members, will number among them. While ethical conduct is important for all client interactions, there are additional considerations for someone with a mental illness.

Financial advisers must exercise professional and ethical judgment appropriately in the identification and resolution of complex dilemmas they face when providing advice to such clients. Added to this complexity is the range of mental illnesses which may present; working with a client with PTSD will be quite different to dealing with a client suffering dementia.

The best interest duty embodies many of the ethical principles which underpin the financial planning process and aims to provide good financial outcomes for clients. Challenges can arise however when clients don’t understand, or disagree with, what is in their best interests. People living with mental illness or cognitive impairments such as dementia are particularly vulnerable to a range of influences that may work against recommendations made by a financial adviser.

When a client reaches the point where they have difficulty making reasoned decisions, or you have concerns their finances are not being appropriately managed, or worse, the client is being exploited, there are several steps you can take:

  1. Firstly, where possible, work with the client’s family. For example, if the client is elderly and suffering dementia, work with their next of kin to determine the best financial outcome for the client. In most cases, the family will have the client’s best interests at heart and want to work with you to achieve a positive outcome.
  2. In situations where there is no family willing or able to take on the role of financial administrator, a public trustee is generally appointed via an application to the relevant administrative tribunal. The administrator is empowered to make financial decisions for the client and together, you can work to ensure positive financial outcomes for the client. An administrative tribunal is an independent statutory body which conducts hearings to consider applications like this and has jurisdiction to make the final decision about whether a financial administrator or guardian will be appointed, and the terms of that appointment.
  3. If you have concerns about the well-being of a client with a mental illness or cognitive impairment; you can report the circumstances to the Office of the Public Advocate (OPA) in your state. The OPA works under the Guardianship and Administration Act to protect the rights of adults with decision-making disabilities, and can investigate the financial welfare of clients if required. The OPA can then decide if an administrator, such as a public trustee, should be appointed.

There is no reason to fear, or avoid, dealing with clients with mental illness. In such cases, you need to be aware of the additional challenges these clients and their families face, and work with them to ensure ongoing financial stability and security. Often marginalised in their community, the growing number of individuals suffering mental illness or cognitive dysfunction needs financial advice and guidance. Removing one major stress factor from their lives can only help.


This information is dated February 2018 and may be subject to change and does not take into account any personal objectives, financial situations or needs. You should consider these factors, the appropriateness of the information and the Product Disclosure Statement (PDS) (available on before making any decisions or recommendations. Zurich Australia Limited ABN 92 000 010 195 AFSLN 232510 of 5 Blue Street, North Sydney NSW 2060. CLYH-013096-2018

1 comment

  • Gary Wake says:

    A good article to prompt the idea that more people than we thought are in this predicament

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