Sudden Money Is Tough For Advisors

By | April 13, 2006

Getting rich quick can be such a burden. You’d think people who suddenly come by a windfall would be a gold mine for financial advisors, but they are often a headache. Advisors say these clients many times display erratic behavior, low follow-through, and are usually flooded with advice from friends and family.

But it’s a key area for advisors to be thinking about. For one thing, windfalls are becoming more commonplace, generated by events like the sale of a business, inheritance, divorce, insurance settlements, retirement, and of course, winning the lottery. Brokerages refer to the group as the “emerging affluent” – people with between $500,000 and $10 million in investable assets. It’s a group that is sitting on about $14 trillion in assets, according to some estimates, but one that is so diverse that financial advisory firms are struggling to formulate a strategy.

“Windfalls can be disorienting for people no matter what their walk of life,” says Susan Bradley, the founder of the Sudden Money Institute, a resource center for recipients of new money and their advisors in Palm Beach Gardens, Fla.

Bradley, who considers herself unflappable with money matters, has drawn on that trait when dealing with clients who’ve become suddenly rich. Like the day an accountant told her about a client who had deposited $47 million into a moneymarket savings account, a low-interest account designed mainly for day-to-day use. This wasn’t a lottery winner frozen in the financial headlights, but an experienced businessman who had sold his firm.

Source: Scottrade News

2 thoughts on “Sudden Money Is Tough For Advisors

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