From the January 2008 issue of Wealth Manager Web • Subscribe!

Nurturing Clients

Advisors are generally schooled in the "slow and steady wins the race" method of financial advice: Save steadily, invest prudently, and always have a long-term plan measured in years or, better yet, decades. But even the best-laid plans can go awry, and large, unexpected expenses are not the only cause. An unexpected windfall can be just as distressing--both financially and emotionally: Enter Susan Bradley, CFP. Fortunately, at least one advisor has devoted her practice to helping clients who have experienced "sudden money."

After nearly two decades of working directly with clients, Bradley, founder of the Sudden Money Institute (www.SuddenMoney.com), now devotes her practice to helping clients who experience sudden money. By creating new wealth orientation programs and developing the Financial Transitions Planning protocols for recipients of "sudden money" and their families she blends life planning and financial planning to accommodate the emotions and concerns that surface whenever a sudden money event occurs in a client's life.

Originally, Bradley defined sudden money as an amount that is significantly larger than one is used to having all at once--typically a liquidity windfall like hitting the lottery or winning a lawsuit. Or the money might come from the sale of a business or a lump sum retirement fund distribution. Whatever the source, it has to be enough money to give someone a new range of choices and responsibilities. "Eventually," says Bradley, "I realized that our transitions planning work applies equally well to a sudden decrease as it does to a sudden increase and, again, the amount is determined by the individual. It could be $50,000 or it could be $50 million."

Bradley lists eight such significant money events: retirement, the sale of a business, inheritance, windfall, divorce, insurance settlement, loss of a spouse, or major career change. And, different as they may be, she has identified certain similarities among these events. While some, like retirement, have been planned for, research shows that not every eventuality may have been considered For example, the use of prescription and over-the-counter drugs increases at retirement, as does the incidence of suicide and divorce.

There are other events that come as complete surprises, such as winning the lottery. The American myth is that money is good and more is better, so winning the lottery must be a good thing. "It certainly can be," says Bradley, "but there's no guarantee that it will be." For many, the event is not so much a change in finances as it is a change in responsibility and liquidity.

Bradley cites an example: Someone sells a business that is worth $14 million. Now they have more money than usual in the bank, available to spend. This is a very significant change in life. So sudden money is not only a change in the amount, it may also be a change in access. It could be a planned event or it could be a surprise. What holds all of this together is the fact that there is a major life event going on, and the issue is change management more than it is money management. And that, says Bradley, is a profound distinction.

All major life events have a financial component. When the life event is major, and the finances are significant enough, it can trigger an enormous transition experience. "Let's say your company stock price soars, and your options are worth millions. Or maybe you receive a huge, unexpected inheritance. Those kinds of financial events trigger major life events. In my experience," Bradley says, "When you get that intersection of life and money, it requires a different approach to financial planning."

Advisors are seeing more liquidity and inheritance events--and Bradley says they need to be prepared to deal with the challenges and change. It is helpful to talk with clients who have already had major life events. Ask them: How did that change life for you? What was the surprise? What do you wish you had known before that happened? What would you tell other people? What do you wish I could have done better?

Bradley has identified "the intersection of life and money" as an analogy to help people understand the complexities of a sudden money or life event. She compares it to driving in unfamiliar territory to get to a family wedding. "You can look on a map and say, 'Oh, I go up to the intersection of Cedar and Main and head due north.' That's good, but maybe you left late and are a little stressed about getting there on time. You follow the directions but have to remain vigilant. You find that it is not a simple east, west, north or south intersection. Perhaps there are route numbers and towns that were not on your map. You're in a hurry. The traffic is bad, and you know that if you make the wrong move it will take half an hour to correct. You really do not want to make a mistake at this point. Finally, you get off the highway, but don't know whether to turn left or right. The intersection is confusing. You can either have an accident or just make a choice and hope that that it's the right one."

"This doesn't feel good," Bradley continues. "You thought you were prepared, but the area doesn't look as you had expected. However, you have to continue. You don't have a choice. This is how clients feel when they face these life events, but instead of it being an hour in the midst of a great life, the confusion and discomfort could last months or even years."

Bradley points out that 70 percent of people who hire a financial advisor or an attorney do so because of a major life event. "The most important thing we do as advisors is to integrate both the human side and the money side. At these critical intersections--when the client is experiencing the height of emotion and confusion--we must be able to achieve this integration."

Bradley returns to the driving analogy: Most people are confident drivers, she says. They know how use a map and can generally assume that the roads are well laid out. There is nothing inherently wrong with the situation except for the fact that the person arriving there for the first time thought that they were prepared for the challenge. Instead, they are confused and somewhat at a loss, but still they must figure it out while in motion and under pressure.

Sadly, many advisors blame the client for making mistakes at the intersection, implying that the client was at fault for not being able to get it together. Bradley believes that advisors must be able to step up to the responsibility of helping clients who face such situations.

The solution, according to Bradley, is what she calls financial transitions planning, and it is what she teaches at the Sudden Money Institute. "We begin with the assumption that the advisors who come to us already have a strong financial planning knowledge base. In fact, we take only seasoned advisors who already have a proven data gathering system, their own financial planning software, and their own practice management strategy. Our mission is to ground them in an understanding of human dynamics."

When people are going through major life events, it is important for them to find their own sense of timing and comfort. There is not a checklist or one-size-fits-all solution. The hallmark of the Sudden Money Institute's process is the "decision free zone." This is designed to accommodate--not to eliminate or ignore--emotion. "Remember," adds Bradley, "if you overlap emotions and finance, there are oftentimes bad consequences."

She sees it as an art form when the advisor moves with the client--holding space, helping them get organized, keeping them grounded, and eventually getting them safely to the other side. The decision-free zone is offered as a technique to help both clients and advisors master this art form. The challenge for both client and advisor is to know what to do in that time frame, how long it should last and how to inform the people in the client's life that no decisions will be made while in that zone. "We live in a society where people are supposed to have their feet on the ground and move quickly," observes Bradley, "so if you are not doing that, there is an implied assumption that there's something wrong."

The advisor's job is to help the client navigate through a variety of difficult transitions. The Sudden Money Institute has developed a variety of tools, including processes, workbooks and organizers. One of these tools is the WIT List (WIT stands for "When in Transition"). They also partner with a firm to offer special scenario planning software that helps the advisor do a better job of shepherding clients through these times. Bradley cites the importance of getting hands-on experience so that you have the confidence as an advisor to use these tools. To that end, the Institute has developed a training and mentoring program that moves the advisor through three different levels of development: SMI Network Advisor, SMI Listed Advisor and SMI Advanced Advisor.

Bradley acknowledges that people experiencing sudden money events are generally facing an enormous range of complexities. "I think a financial planner is a really good point person, but you still need to put a professional team in place," she says. This team could include an attorney, an accountant, a family counselor or therapist, a philanthropy consultant and/or a life coach." The Institute holds its annual Dialogues Conference to bring together these types of interrelated professionals.

"They may all have developed very good professions and great processes, but they have developed them in a silo," Bradley explains. "The Dialogues Conference is a place for professionals to have open conversations that will, ultimately, benefit the client through a higher level of understanding and collaboration."

Top financial advisors are constantly honing their skills, refocusing their vision and looking at the overall value they will need to bring to their clientele. Bradley's organization qualifies as one more place to gain new insights and strengthen a holistic planning mindset.

Marie Swift, a longtime industry observer and business consultant, is president of Impact Communications, Inc.(www.ImpactCommunications.org).

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