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| Milestone Consulting, LLC

financial planning for new moneyIt’s the storyline of dreams — or nightmares. Whether it’s lottery winnings, settling a major lawsuit or an inheritance, one day, you’re substantially wealthier than the day before.

It is no shock that sudden wealth does not equate to stability and happiness. In fact, for most people, more money leads to poor decisions and feeling overwhelmed. People with newfound money may even suffer adverse physical symptoms like increased anxiety or panic attacks, obsessive thinking, sleep disorders, irritability and many others.

The pattern is so common that the Money, Meaning & Choices Institute (MMCI) coined the term “Sudden Wealth Syndrome” to describe the stressful effects of sudden success or wealth. Companies like the Sudden Money Institute were founded to make these and other financial transitions less stressful, more productive, and even enjoyable. The Institute’s founder and financial thought leader, Susan Bradley, has developed a unique process and tools for managing the human dynamics resulting from financial change.

Suddenly becoming substantially wealthier is a really big deal, and it can be detrimental to a person’s life without the right mindset. How can those who reach a substantial financial turning point keep their lives under control? 

First, let’s examine what they don’t have: experience with money. When it comes to money and decision making, experience is the critical asset. Rarely do you see a successful business man or women who has accumulated for decades make rash decisions with their money.

With a lack of financial experience – and the relationships and lexicon that goes with the responsibility of having wealth – the most critical question in a person’s life is “WHO.” Whom will you trust? Who will you be honest with, whose advice will you actually take, and who is genuinely looking out for your best interests?  Whose experience can you borrow?

Second, rash decisions are a bad idea. Processing any huge change takes time, and pulling the trigger on a decision with an exorbitant amount of money on the line can be detrimental to not only your wallet, but also to you emotional well-being.

This is where a trustworthy financial planner can be extremely beneficial. With clients who have suddenly obtained substantial wealth, I typically start by discussing their future – what they hope to do with their money in the coming months and years. Using that information as a framework, we can then develop a plan to ensure they see the benefits of their wealth for as long as possible.

So many people come to us after having interviewed or working with other advisers, and they openly acknowledge they felt talked at or talked over. They felt they were up against porcelain sales cycles. Stakeholders in this community should heed that their clients will need more hand holding and coaching and genuine passion for them that’s perhaps ever before.

Having resolved nearly 10,000 cases, having worked pro bono for widows and families affected by September 11, 2001 and the Beirut bombing 1983, we have an anthology of collective experience with decision making and human dynamics associated with money.

What have we learned? The most important aspect of managing the risk associated with newfound wealth is setting the stage. Powerful emotions force people to distrust, fail to listen, and possible even shut down their ability to process information.

A successful financial planner will be able to set the stage by having compassion and empathy for upcoming challenges, acknowledging the full scope of the challenge, and empowering the client to trust in a few lifetimes’ worth of experience.

One Comment

  1. Gravatar for David

    Great post! see U in Asheville...

Comments are closed.