Inheriting wealth may seem like the definition of financial security, but if you don't know how to handle it, it can cause much anxiety instead. As founder of The Wealth Conservancy Inc. (a fee-only wealth coaching firm in Boulder, Colorado) and creator of the Inherited Wealth and You workshop, Myra Salzer is dedicated to helping her clients understand and enjoy inherited wealth.
"People who have worked for their wealth are different than those who inherit it," Salzer says. "When someone has worked they have had a chance to understand and respect their earnings," whereas someone who has come into wealth with little or no preparation doesn't have that same kind of relationship. "If they blow it there is nothing they can do to recreate it," she says.
Most of the time it's people in their teens and twenties that inherit wealth, Salzer says. And at that age most people just aren't ready to handle the responsibility. "Usually people, especially younger people, come to me after they have had a bad experience," she says. "Once they are taken advantage of, it's hard for them to trust someone."
Aside from financial inexperience, there is also emotional stress that comes with wealth inheritance. In their workshops, Salzer and Thayer Willis, a Portland, Oregon-based licensed clinical social worker (LCSW) and psychotherapist, tackle the personal issues newly wealthy people face.
Salzer and Willis will be sharing their insights with attendees on day four of the NAPFA 2002 National Conference in Nashville, Tennessee, from May 15-19. They will address the mixed messages newly wealthy people face and how planners can help ease client concerns.
"People who come into wealth are much like Dorothy in The Wizard of Oz," says Willis. "They're plucked from their lives and dropped into a totally foreign land."
This is when wealth coaching comes into play. "When I was a distance runner, I had a coach to advise me, to push me, to complain to, and to help me realize my goals," Salzer says. "Wealth coaching is the same thing."
Much like a financial planner, a wealth coach addresses all the issues surrounding inherited and windfall wealth, including mapping out basic investment strategies to meet multigenerational financial goals. But Salzer insists a wealth coach is not like the everyday planner. "We don't respond to the investment vehicle du jour," she says. "We're not investment managers, nor are we stock analysts. We're coaches just like any other."
Willis suggests planners and wealth coaches should advise their clients to go slowly and really understand what their new wealth means to them. "For some clients wealth is security; for others, it's freedom or even power," Willis says. "Find out what kind of possibilities and fears emerge because of the new money."
At the NAPFA conference, Salzer and Willis will present attendees with a questionnaire to use in helping their clients clarify their values regarding money and wealth. Answers to questions such as how clients think the new money will affect their relationship with their spouse, and whether they have a fear of outliving their money, will give planners a better understanding of their clients' expectations.
"This is an important place for clients to start before they are ready to set priorities and follow them up with actions," Willis says.