There is no shortage of stories (both real and cinematic) about financial advisor gambling addiction. Given the nature of the business there is no doubt that it’s one industry that should be mindful of employee gambling behavior. That’s not what this article is about. Instead, this feature reaches out to financial advisors who are uneasy about client behaviors regarding gambling. It is an industry concern that has skyrocketed with the legalization of sports betting and particularly with the proliferation of online gambling across North America:
“What is particularly dangerous about sports betting, Thielmann notes, is that it’s largely being done on mobile phones. Where previously placing a bet might mean going to a casino or a bookmaker’s, now (they) can bet from their couches. They get pinged with betting notifications. They get the gratification and gamification of an online platform. All the while they could be doing significant financial harm to themselves […] Lenders and underwriters can see that transaction history and it can come to have a hugely damaging impact on someone’s credit score. Just as the transaction records are where a sports betting habit can begin to do serious financial damage.” (Wealth Professional)
What Are the Responsibilities of a Financial Advisor?
By definition, a financial advisor (or financial planner) is a professional who helps an individual budget, establish strong credit, build, and control their money. Their duties directly involve maintaining a trusting relationship with a client by monitoring their overall financial portfolio to ensure their money is growing. They not only look for investment opportunities, but are responsible for advising against financial decisions that could compromise a client’s portfolio. Considering that casino gaming and sports betting is as savvy of a financial plan as investment in Florida swampland (view the data) it’s safe to say that this all falls in an advisor’s wheelhouse. But where does the responsibility begin and end? How does a financial planner walk the line between performing their professional duty and overstepping into territory that they’re not qualified to advise on?
Below is a breakdown of how your firm can help protect the interests of a client who may struggle with gambling while supporting their behavioral health as a beneficial side effect.
How Financial Advisors Can be Effective in Monitoring for and Intervening Against Client Problems with Casino Gaming or Sports Betting
I. Know the Problem Gambler Profile
Before you can initiate a strategy, it is important for you (and fellow advisors) to develop an understanding of potential client vulnerabilities to problem gambling along with signs and symptoms that you may come across in your interactions with them.
For one, there are certain vocations where problem gambling is more prevalent when compared to the bulk of America’s workforce. One group of individuals who land in this category are professional athletes. They have a statistically greater vulnerability to developing gambling disorder than the general population. Another group includes veterans and active military servicepersons.
Furthermore, individuals who struggle with certain mental or behavioral health conditions are known to be more vulnerable to problem gambling. You are certainly not at liberty to ask a client about such conditions. However, they may confide that they do have an issue or disorder because they understand that it has had a negative impact on their financial decisions in the past. The following conditions are known to be associated with problem gambling:
- Alcohol use disorder (AUD)
- Anxiety disorder
- Bipolar disorder
- Chronic stress
- Depression
- Post traumatic stress disorder (PTSD)
- Schizophrenia
In addition, genetics, gender, age, and a number of psychological factors also play a role in vulnerability.
What about the signs and symptoms of gambling addiction? Beyond those that their loved ones will be exposed to (view them all here) those that a financial planner may come across in their interactions with a client include the following:
- They constantly talk about casino gaming, sports betting, or fantasy sports in casual conversations with you.
- They get upset if asked about their gambling habit.
- They have lied to you about gambling (although you can see it on their transactions).
- They make frequent and/or unreasonable requests to withdraw funds from investments and accounts without telling you (their advisor) what it’s for.
- They have been convicted of theft or fraud (which may have been to support a gambling habit).
- They are in significant debt yet continue to gamble.
Understanding all of the above will help you and associates better understand the potential risk to a client’s behavioral health and financial portfolio.
II. Communicating to Clients About the Financial Risks of Gambling
Some financial advisors maintain a cordial and strictly professional relationship with clients. Others have developed a more intimate relationship and enjoy blunt candor regarding their financial habits. If the latter, it is possible to have an open conversation about the financial risks associated with gambling. But we’ll assume that the former applies to most planners who are searching for insight into how to mitigate risk for clients.
As a financial planner, it is perfectly reasonable for your firm to put together a variety of documents and informative e-brochures that can be provided to clients to supplement your verbal advisements. Create one specific to the risks associated with gambling. Such a resource can be beneficial to a client who thinks that they can leverage their “knowledge” of sports and/or casino table games to turn it into a side hustle if not a consistent income stream. Data shows that this is dangerous fallacy. Use the following statistics regarding gambling debt when creating this information resource:
Nearly 1 in 5 sports bettors allot a quarter of their paycheck to sports betting
1 in 5 sports bettors are in or have been in debt from betting on sports
More than 50% of sports bettors are willing to wager $10K at a chance to win $1 million
U.S. gamblers lost $120 billion in the most recently reported annum
Average gambling addict (men) debt is between $55,000 and $90,000
Average gambling addict (women) debt is between $15,000
Over 20% of compulsive gamblers file for bankruptcy
Include reference to the Gambler’s Ruin Formula for added credibility.
III. Establish Monitoring Tools and Protocols
Financial advisors already have approval for access, and insight into, a client’s bank statements and transaction history. As a result you can monitor for trends and areas of concern. Given that it’s your job to monitor and protect their financial interests, flagging an issue is appropriate to the professional relationship. It also creates an opening for conversation around the financial implications of gambling behavior.
Once an understanding has been reached, you are in a position to offer a client opt-in solutions to hedge against problematic gambling behavior. Available options will depend upon connected banking institutions, and may include the following protocols
- Block connections between client accounts and regulated online gambling operators.
- Set gambling spend limits when connections between accounts and online gambling operators are allowed.
- Automated reminders for clients when there are uncharacteristically excessive withdrawal amounts made from accounts (it’s easy for them to lose track of online wagers otherwise).
- Automated reminders for clients when there are uncharacteristically excessive withdrawal frequencies made from accounts (same reasoning as above).
- Automated reminders for clients when there are uncharacteristically timed withdrawals (late hours of the night, etc.) made on accounts.
- Issue periodic statements (aka “spend analysis”) on how much clients are spending on gambling activities.
- Provision of digital tools to block online gambling, such as Gamban.
- Provision of digital information resources such as problem gambling tests.
Some of the above will require coordination with a client’s banking institution and investment in monitoring technology. View this resource on Bank Responsibilities Regarding Customer Gambling habits which will help guide your firm as well.
IV. Partner with a Problem Gambling Support Provider
This step is very important when it comes to where to draw the line regarding professional duty and overstepping. As a financial advisor, you may only advise a client about the direct financial ramifications regarding their gambling behavior and nothing more. To get to the root of the behavioral problem (if there is one) your sole responsibility is to refer your client to a service that provides problem gambling assessments and treatment. That being said, you can absolutely integrate this referral connection into your digital properties (website, e-brochures, news releases, etc.).
As an example, look to gambling operators including DraftKings (view more), FanDuel (view), and BetMGM (view). They among others to come have collaborated with America’s leading problem gambling treatment provider. These operators communicate to members/clients that should they struggle with gambling behavior, they can get immediate access to online support through their respective relationships with Kindbridge Behavioral Health. Financial advisors and firms are called upon to do the same. In doing so they can connect a compromised client instantly to an effective and proven support platform.
V. Be There for the Client in Recovery
We’re not suggesting that you request to join in on a client’s group therapy for problem gambling. Once referred to Kindbridge their journey to recovery is between them, their counselor, and loved ones. However, you can stand by their side to help them repair their financials. This may simply involve being there to walk them through your debt consolidation services and to even connect them to debt assistance organizations if they require help beyond what your firm can provide.
Being there to help alleviate the financial burden of their gambling behavior is not only a morally sound thing to do, it’s a good business practice. It will further foster a relationship of trust between yourself, your firm, and the client. Word of mouth may spread accordingly and you’ll be established as a financial advisor who actually cares.
Kindbridge will help your firm come up with a plan for how to monitor for problematic gambling behavior and provide assessments plus counseling services for clients who opt-in to get help. Consider it the ultimate in holistic financial planning services in today’s tumultuous casino gaming and sports betting environment.
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