FA Center

You’ve just come into a pile of money, so why are you feeling so anxious?

To help people cope with a financial windfall, back off and give them lots of space

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Financial advisers are uniquely positioned to see how sudden wealth changes people. Whether their clients inherit a fortune, win the lottery or otherwise wind up with a windfall, the after-effects can be jarring.

Unmoored and disoriented, clients with newfound riches may behave in strange and unpredictable ways. Coming to terms with a flood of money requires an almost constant resetting of your rational and emotional state.

“It’s an adaptive experience. Clients can shape-shift right in front of you,” said Susan Bradley, founder of the Sudden Money Institute in Palm Beach Gardens, Fla.

Bradley encourages advisers to be patient with people who find themselves with substantially more wealth than they’re used to having. Resist judging their actions and behavior, at least at first, because they’re probably struggling to make sense of a new reality that’s hard to process.

It’s easy to assume sudden wealth would make someone happier and more excited. But it can also bring uncertainty and stress.

“On the decision-making side, all that newness can be unnerving to people,” Bradley said. “On the relationship side, it challenges their sense of identity. They think, ‘Now that I have this, who am I? Where do I belong? Where do people with my kind of money go?’”

In addition to withholding judgment, advisers need to remain nimble in how they relate to such clients. If they’re accustomed to dealing with an attentive listener, for example, they may find that person becomes a talkative storyteller.

“You might see changes in how they pay attention in a meeting,” Bradley said. “They may have foggy brain, decision-making fatigue or a fractured focus.”

Even if these clients previously bought into long-term planning, their sudden wealth may induce short-term thinking. As a result, wait before making sweeping pronouncements or assigning visioning exercises that involve peering decades into the future.

“These clients may not be in the best state to make great long-term solutions,” she added. “So watch how they receive information. If you see they have a short attention span, shorten your meetings to 10- or 20 minutes instead of one hour or more. Say the most important thing first. Get right to it.”

Anticipate other changes as well. Individuals coping with a cash hoard might worry about their personal security and wellbeing — and display an uncharacteristic paranoia in protecting their valuables and distrusting strangers. “Some become concerned about being a target,” Bradley said. “Maybe they don’t share their cell phone number because that makes them feel safe.”

In some cases, clients expect to receive millions of dollars and get giddy as they prepare to celebrate. For instance, they may anticipate equity awards if they work at a company that’s considering an initial public offering.

Kristin McKenna, a Boston-based certified financial planner, often tells these clients, “Don’t pre-spend a windfall that you don’t yet have.”

Once they obtain the money, she recommends that they safeguard their interests before handing out the funds to others. “We like to make sure they take care of their own needs before they do something for charity or take care of the next generation,” McKenna said.

Advisers cannot insist that clients calm down, clear their head and ponder the long-term repercussions of impulsive money moves. But they can broaden one’s perspective and share cautionary tales of others who have come into great wealth.

Better yet, advisers can suggest that clients use time to their advantage. Rather than rush to make big decisions, they can proceed at a more deliberate pace.

Say a client declares, “It’s my money. I’m not sharing it.” An adviser can reply in a supportive tone, “You can do whatever you want with your money. Maybe you want to take a year to digest all that’s happened. You don’t have to make that decision right now.”

“Give them another option rather than making something an absolute,” Bradley said. “Let them circle back to a decision. Run some “what-if” scenarios. You want to give them the space to back up and turn around” as they enter this new stage of life.

Also read: ‘I promised myself I’d never be that broke again.’ This financial adviser’s family inherited $1.4 million and quickly lost it all.

Plus: Here’s when your financial planner’s advice needs a second opinion