How to Conduct a Financial Intervention

When most people think of an intervention, they think of friends and family gathered to demand that a loved one seek treatment for alcohol or drug abuse. If it goes well, the person—overwhelmed by the outpouring of love and concern—agrees to receive the lifesaving treatment.

The same principles used to intervene in substance abuse can also be applied to someone whose decisions regarding personal finances are becoming destructive and beyond control. A loving confrontation by a small group of people can help someone regain control of problems such as compulsive shopping, gambling, risky investing, falling for scams, and failure to make necessary plans for the future, such as being retirement ready. What it takes is a little courage, a little planning, and a lot of love.

When Is a Financial Intervention Needed?

There are two primary reasons that interventions take place. First, a loved one has lost the ability to make healthy decisions and is on a path to financial self-destruction. Second, these behaviors are beginning to take a toll on close friends and family members.

Is There a Victim?

Financial interventions are perhaps most important in situations in which a relative or friend is either knowingly or unknowingly being financially exploited to pay for the perpetrator’s overspending. A successful family-driven intervention to protect an elderly person was reported in the Oct. 4, 2021, issue of The Gerontologist. It was satisfactorily resolved by family members with no reports to authorities and minimal private-sector involvement.

Tina R. Kilaberia, Ph.D., MSW, a postdoctoral fellow at the Betty Irene Moore School of Nursing at the University of California, Davis who co-authored the study, says that when financial exploitation is involved, it’s important to first find out how the victim wants to proceed and whether it will be reported to authorities and other privacy issues.

Family interventions may be a viable option in these cases since agencies such as Adult Protective Services may not respond to financial exploitation if it is not co-occurring with physical elder abuse. She warns, however, that it is not common for perpetrators “to admit they need help, agree to get help, and actually get help.”

Reasons for a Financial Intervention

The most common reason for a financial intervention is compulsive and out-of-control spending—two things that are very similar, but simultaneously different.

• Compulsive spenders literally cannot keep themselves from making purchases, often due to some type of pathological disorder. Sometimes these individuals have garages and closets full of unopened and unused purchases accumulated over many years.
• Out-of-control spenders, on the other hand, make purchases because they find shopping stimulating, believe it will help them find inclusion, or have unrealistic beliefs about what their purchases will accomplish.

The biggest result of all this spending behavior is mountains of consumer debt that can make meeting daily expenses financially impossible.

Another common reason for a financial intervention is a high level of risk-taking behavior. These individuals may gamble excessive amounts of money on risky propositions, demonstrating a belief that they’re due to hit it big. They often borrow large amounts—whether from a bookie or a margin account at a brokerage firm—in an attempt to just get back to even.

Finally, many people fall prey to scams or financial frauds, often through no fault of their own. Although the elderly are easy targets, even people who are not considered vulnerable can be deceived by scammers over the internet or telephone. If a person has a pattern of falling victim to such scams, a financial intervention could help them save what’s left of their money.

There are times when severe financial problems are symptomatic of another root problem. This always needs to be evaluated, so that precious time and energy are not wasted doing an intervention for something that won’t fix the core problem. This is often the case with drug addicts who have done a good job of concealing their problem but can’t hide the fact that they are burning through cash.

The Purpose of a Financial Intervention

One of the biggest misconceptions about a financial intervention is that it’s an attempt to demand a change in behavior. If the intervention takes this tone, the person will usually feel judged, rejected, and misunderstood. They will likely shut down, withdraw from reason, and retreat to arguing. These types of interventions are most often unsuccessful.

In reality, a financial intervention is an admission by a group of people that they have been powerless in their attempts to stop destructive behavior. They have individually expressed concern, confronted, and even threatened the individual, only to fail in igniting change in the person’s behavior. Thus, because of this helplessness, they’ve made a decision as a group to stop making the problem worse through their enabling behavior. More importantly, they want to provide access to outside help if the person is willing to accept it.

These individual realizations, group decisions, and the offer to help are all delivered in the midst of expressing a deep love or appreciation for the person. The need for change is expressed not in anger or disgust but in sadness and loss. For someone struggling with destructive financial behavior, it can be a life-changing thing to have a room full of the most important people in your life tell you how much you mean to them and how worried they are about you.

It’s within this context of being loved and accepted—instead of being shamed and rejected—that interventions succeed in their final objective: to offer outside help. Because family and friends either lack the knowledge or are too closely involved to be of help, the involvement of a therapist, debt counselor, or financial planner is the crucial next step.

How to Conduct a Financial Intervention

If you determine that someone is in need of a financial intervention, your first question is whether you should employ a professional interventionist. The advantage is that such a person will help streamline and organize the process, providing valuable resources along the way. The disadvantage, of course, is the cost of hiring someone.

As a rule, the more serious the problem, the more you should consider professional help. It’s likely that a 24-year-old with $20,000 in credit card debt doesn’t require a professional interventionist. However, a 50-year-old with $100,000 in compulsive gambling losses does. For those who are losing their ability to make sound financial decisions, a financial power of attorney can help protect their personal assets.

Select Your Team

A financial intervention should include three to eight people who matter most to the person struggling with negative financial behavior. These individuals will hold the most sway in breaking through someone’s shell of denial and resistance to outside help. People who are strongly disliked by the person who needs help should be excluded, simply because their presence may cause a retreat into defensiveness or anger.

The subject of the intervention is naturally going to be surprised, frightened, and perhaps angry about what is going on. With this in mind, it is important to elect one spokesperson from the group to do most of the talking.

Emphasize Love and Support

The chosen group of people should gather at a private location while one person finds an excuse to go to that location with the person being helped.

The spokesperson will explain the reason for the gathering. They should emphasize that this is not about beating someone up; rather, it’s about addressing a specific problem. The subject will then be informed that each person will briefly say what they need to say, that there will be an opportunity to respond at the end, and that the whole thing won’t take more than an hour.

Present Impact Letters

After the introduction, each person in the group will read what is called an impact letter about the person and the problem. The letter should be no more than two pages and include the following:

• How this person specifically matters to the reader
• How the problem has affected the reader and others
• A love-based plea to accept help

Ideally, no one besides the group spokesperson says anything except for what is in their letters until afterward.

Refuse to Enable While Offering Help

After all the letters have been read, the spokesperson shares the two ways in which the group is going to help from this point forward.

First, the group is unwilling to continue to enable the person in making financially poor decisions. This may mean that they will not, for example, lend the person money, accept extravagant gifts, or engage in discussions about penny stocks with the person for whom the intervention is being held. Whatever the old system is, the individuals in the group have agreed to stick together in their mission to stop being part of the problem.

Second, the spokesperson will inform the subject of the type of outside help that has been arranged and ask the subject of the intervention whether they will accept this help. Anticipating a positive response, the group should already have the first appointment set a couple of hours after the intervention.

The Bottom Line

Sometimes the subject of an intervention emerges agreeing to accept help. But many successful financial interventions start with the person initially refusing the offer, only to come back and seek help weeks, months, or even years later.

However, this only happens when family and friends stick to their guns and refuse to enable the person to continue in destructive patterns after the intervention. Through those loving refusals, individuals with a problem are eventually forced to deal with the reality of their choices. Then, if the offer of help still stands, they often accept it.