What Does It Mean to ‘Carry Wealth Lightly’?

Writing here previously, I noted that we are all responsible for understanding how best to guide clients and ourselves through financially stressful times. Best: The tools exist to help work through the process – this time and in the future.

Little did I know that a different stress-related financial advisor story would come my way. This time it was from a dear friend who is a family office wealth advisor.

Rags to riches

We’re all familiar with the phrase rags to riches – let’s begin there. After many years of hard work, the family (client) was rewarded with great wealth. The business was bought out, and they were set for life.

The family was incredibly stressed and needed guidance from my wealth advisor friend. The client couple were behaviorally very well matched, hence their success; he was a strategic risk taker, and she a reflective thinker. They balanced each other well.

Initially, they were not fazed by their wealth or the celebrity it brought – hence carrying their wealth “lightly.” But neither could resolve the place they now found themselves in.

Their relationships were suffering as their financial success was creating distance between them and the people they were once close to. Their college-aged children had a hard time with their peers; suddenly, the family sensed they were different and were paying a high price for their success.

Diagnosis = solution

My advisor friend wasn’t sure how to advise them and was concerned about the stress level the family was under when this should be a season of happiness and joy. As I listened to this story, strangely, it felt a little like déjà vu to me as I had experienced something similar in my early days of success.

As you enjoy your achievements and plan longed-for holidays, maybe even upgrade your car, perhaps move to a new house, you become aware of other considerations.

Success and wealth bring strange behaviors; my friend continued how people in his client's lives were acting differently toward them. Close friends and family members resented their good fortune and treated them with disrespect or aloofness. This newly wealthy family felt lonely and isolated as their old friends pulled away.

Conversely, others started acting more friendly than before. This doesn’t help the feeling of isolation because maybe people are interested in the money and not what they feel. You get the idea.

When you are aware of the signs and symptoms of Sudden Wealth Syndrome. Yes, SWS is a thing. It’s the distress some individuals experience when they newly have large sums of money. It can change the behavior of the newly wealthy, change behavior *toward* them and leave them feeling guilty, isolated and even fearful of losing the newfound wealth. You can take steps to protect yourself; you can also learn how to handle your new wealth, so it adds to your life rather than detracts from it.

You need to protect yourself emotionally. Taking it slow with your newfound wealth can help you financially and emotionally. It lets you process your feelings about your new situation instead of trying to adjust to a new identity overnight.

However, many people need a little more help overcoming the emotional stress of going from rags to riches overnight.

Initial, ongoing guidance

I pointed out to my advisor friend that when markets become unsettled, advisors like him – particularly those who understand financial behavior – know how their clients will react and can step in and become a sort of life coach to help them navigate the downturn.

Advising clients suffering from sudden wealth syndrome is no different. Refocus them on their life plan: Maybe there is more they would like to do, such as giving to charities and other community support. Advise them on how best to restructure to be able to do this. Talk to them about long-held unfulfilled passions that they can now finance. Help them see how longevity can be funded more effectively. Maybe invest in a better health regime for themselves and those they care about.

Encourage them to stay close to friends, continue to get involved in the same activities they’ve always enjoyed with them, go to the same restaurants, and hold off on making any life-changing decisions until they have learned how to carry wealth lightly.

Further guidance those clients may need:

• They shouldn’t feel guilty about wealth; they deserve it.
• Stay close to trusted friends. Real friends will be excited for them.
• Feeling anxious is okay, and it can be managed.
• Never isolate due to the reactions of friends and family.
• You will ensure there is a solid team around them to advise them.
• You will work with them to protect and safeguard their money.

Worth noting

When we label something – such as Sudden Wealth Syndrome – I realize a fair number of eyes will roll. But this is a recurring phenomenon that has earned its name and attention. Too, unless we can nail something down – you might say, diagnose it – we can’t treat it. In this case, offer solutions to those affected and even preventive measures for those who may be headed toward SWS.

Similarly, when we talk about behavior, emotion and decision-making, it can seem like supposition. A subjective soft science. Not so. As discussed previously and at length in this space, innate behaviors and even what I would call “money energy” can be measured via a validated discovery tool. Doing so helps individuals – investors, for instance – understand how and why they are exhibiting behaviors they may have not even realized. On the flip, you as an advisor and de factor life coach can best help them if you know their behavioral profile…and your own.

Address (financial) stress

When your clients understand that money can be a source of financial stress, dealing with it is more accessible. It’s no different from every other form of stress, though a failure to recognize and address financial stress is a common missed opportunity.

As an adviser, if a client’s anxiety keeps them awake at night, help them as you are able and potentially direct them to a medical practitioner.

How do you or your clients carry wealth? I’m collecting case studies and would love to have your input.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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