A reflective approach to sudden wealth
4 planning strategies that unlock the transformative potential of a financial windfall.
Imagining a financial windfall can be fun.
But the realities of sudden wealth are complex.
Whether from receiving an inheritance, selling a business, or liquidating shares, it brings a rapid and significant change to your financial life.
And while sudden wealth has transformative potential, it also carries a sense of responsibility and weightiness.
That was Aaron's situation.
He knew his mother was thinking of selling her business, but when she decided to give him $10 million, he was shocked.
She said she wanted him to benefit from her hard work while he was young and indicated there could be more coming.
While it all sounded amazing, Aaron mostly felt the pressure of deciding what to do and how this new wealth would impact his family.
AND he worried how his mother would view his choices and decisions.
Set yourself up for reflective action When Aaron asked if he and I could talk, I felt his stress, compounded by excitement, as he told me his story.
He really did want to do the right thing for everyone.
I listened as he shared the swirl in his head, and then I asked, "What's the urgency?" He gave me a quizzical smirk and said, "That's it?" "Yes," I said.
"This type of sudden wealth has the power to change your life-and your family's lives-sometimes for generations.
But to unlock that potential, you need to hit the 'pause button.'" I went on to suggest that he try not to get lost in a chain of seemingly urgent decisions and miss the larger relationship and family moment.
Try not to get lost in a chain of seemingly urgent decisions and miss the larger relationship and family moment.
My main message to Aaron was that pausing doesn't mean inaction.
It means holding off on the urgent actions swirling in his head, which were really just a set of reactions.
I then coached him through a reflective exercise that helped him turn a stream of reactive decisions into a more proactive and deeply personal process.
If you are in a situation like Aaron's-regardless of the source of sudden wealth-here are four "pause button" reflective actions you can take to ensure you achieve the outcomes you want for your wealth, future, and family.
Tease-out the parts to see the whole Aaron felt urgency because he viewed this sudden wealth moment as one big problem to solve.
And he genuinely cared about the "whole problem." So, the pause button reflection starts with a tease-out exercise to pull the problem into separate parts.
Aaron first had think about the two different dimensions of wealth planning and tease-out the functional-financial considerations from the emotional-relational ones.
He could then tease-out the different people involved in the process: his wife, his mother, some trusted friends, and his financial professionals.
They all had different vantage points that didn't carry equal weight for him.
The wealth management work was dominating his thinking, but he knew he had to ensure it didn't take precedence over his family's vision and the choices and decisions that would frame their future.
Reflective action: Tease-out [Bracket-off].
Tease-out the parts to see the whole.
First, write out a list of the questions this wealth raises for you in both the functional-financial and emotional-relational spaces.
Second, identify the range of choices the wealth offers and the specific decisions you foresee needing to make.
Third, look at the lists-on your own and with trusted people in your life-and ask, "What am I feeling and thinking?" for each item.
And fourth, select two or three actions to explore more deeply right now, and bracket-off the topics you want to address later.
Identify the range of choices the wealth offers and the specific decisions you foresee needing to make.
Surface the fears to find the wish On the surface, Aaron didn't come across as a fearful person.
But the urgent swirl in his head was largely fear-based.
Sudden wealth raises a host of fears in us.
And when our brains detect a possible threat, we prioritize avoiding harm over longer-term rewards, making perceived risks feel more urgent than opportunities and narrowing our focus.
So, intentionally surfacing these fears-and naming them-is another pause button reflection to help expand our thinking.
Once we surface them, we can seek the wish behind each fear.
This is powerful because every fear has a flipside wish.
Rather than trying to understand or unpack the fear, just ask, "What is the wish?" Aaron, for example, was fearful of disappointing his mother.
When I asked him what his wish was, he responded immediately, "I wish I could co-create an investment path with Mom." Reflective action: Process out loud.
Say what you are feeling and thinking in a way that sets up the conversations you want to have.
Aaron might say to his mother, "I am feeling excited and grateful but mostly overwhelmed.
And honestly, I'm feeling some pressure not to disappoint you.
I would love to use this moment to co-create an investment path with you so we can think about your investments and mine in a more comprehensive way." What is the purpose of this money for you, your family, and your future?
Clarify the purpose to surface the goals When we find ourselves spinning in urgency like Aaron, we generally kick ourselves into action by making a list of functional goals.
Aaron's list included addressing tax concerns, gathering an investment team, having a short-term hold strategy, and building an investment portfolio strategy.
These are important, but they distracted him from the larger pause button reflection: What is the purpose of this money for you ...
The wealth frame I introduced to help Aaron and his wife think and talk about their wealth had four categories for discussion: Lifestyle wealth-How will this wealth sustain the lifestyle you want to live?
Later-in-life wealth-How will this wealth create financial security for your retirement future?
Generational wealth-How will this wealth impact your children and (possibly) grandchildren?
Philanthropic wealth-How will this wealth allow you to make a community or social impact?
Reflective action: Explore your mental models about wealth.
Mental models are our assumptions and beliefs about how the world works.
Expand your mental models using the four questions of the SETE game: Surface, Explore, Test, Expand.
What thoughts or beliefs come to mind when you hear the word "wealth"?
What past experiences have created those mental models?
What feelings and behaviors arise from that way of thinking?
How might you expand your mental models about wealth so you have more options?
Focus on "me" to connect with "us" I describe families as "wired together." Just imagine the sentiments and views about his sudden wealth that are flowing through the wiring of Aaron's larger family system-between him, his wife, his mother and brother, his wife's family, and eventually, his children when they are older.
How would Aaron answer the question "Whose money is this?" The straightforward answer is "Mine." But we all know questions like this are never straightforward.
The pause button reflection I suggested to Aaron was to distinguish between "me" and "us" to get at the individual and collective needs and perspectives.
Aaron must first reflect on his own identity-Who am I in relation to wealth?
What impact does this wealth have on "me" and who I want to be?
And then, he and his wife can reflect on the role this wealth plays in their immediate and extended families.
Reflective action: Use "What if...?" thought experiments.
To assess the impact and consequences of your choices and decisions around a sudden wealth experience, run a series of "What if?" thought experiments.
Here's one: "What if we bought a vacation house at the beach?
Who would this impact today and into the future?
What are the intended consequences for this decision?
What unintended consequences could it create financially and for the family?" The more you can talk about, the more potential you have for intimacy.
"Talk about anything" intimacy In the context of relationships and families, wealth is always about intimacy.
I define intimacy as "talk about anything." The more you can talk about, the more potential you have for intimacy.
When you intentionally hit the "pause button," you give yourself and your family system the opportunity to talk about more things.
And, in turn, that expands your potential for intimacy in your relationships and family.
How this transformative moment will play out for you, or for Aaron, is a wonderful unknown.
But the way you handle it will change the trajectory of your life and the lives of those around you.
So, avoid getting caught up in a set of in-the-moment urgent decisions by intentionally hitting the "pause button" to set up reflection and reflective actions.