News, Vision & Voice for the Advisory Community
A special compassion and knowledge is required for people who get what we think they want
May 3, 2011 — 2:44 PM UTC by Steve Garmhausen
Elizabeth’s note: I first thought about the troubles that come with financial windfalls when I was covering the aftermath of 9/11 in New York City. Many of the victim’s families received millions of dollars, but in some cases the money just seemed to cause more heartache. Some fought about whether to sue, or take the money offered them by government. Once they received the money — which press reports say averaged more than $1 million — there were complications about what to do with it. More grief ensued.
My husband and I were living near Ground Zero on 9/11. Neither of us was hurt, but because we were knocked out of our apartment for a month in the aftermath, we ended up on someone’s list of victims. One day we got a check in the mail for $2,000. Our first impulse was to give it back — our insurance company was covering our stay in a temporary apartment, and though we’d been through some difficult days, we were fine. Eventually, though, we came up with a plan: donate half to charity, and blow the other half on a night out on the town in Lower Manhattan, were many small businesses were still struggling to survive. We got a nice thank you from the charity, and had a wonderful night with friends. And, I can remember being glad that the money was spent — because having it was a reminder of what we’d gone through.
Susan Bradley was part of a team of volunteer advisors who was in New York City after 9/11, and she’d been mentioned to me before by a New York City advisor who found her coaching program helpful for 9/11 victims. When Steve Garmhausen suggested a story on her Sudden Money Institute, it seemed worthwhile.
Late last year, Dale Mitchell was reeling.
Within the span of a few months, the 57-year-old Jupiter, Fla., resident had lost both of her parents and had sold her 30-year-old veterinary business. On top of it all, Mitchell’s relationship with her partner was getting more serious. The successful entrepreneur suddenly found herself depressed, and it had largely to do with money.
“I’d never had anxiety issues about money in my life,” says Mitchell. “And now there seemed to be an infinite number.”
Even the financial advisor for Mitchell and her partner, Debra, knew that he was out of his depth in terms of Mitchell’s swirling emotions. He suggested that she and Debra meet with Susan Bradley.
Bradley, a former advisor, built the Palm Beach Gardens, Fla.,-based Sudden Money Institute around the idea that people need a different set of services to cope with windfalls and major financial changes.
Trying in unforseen ways
She offers counseling to individuals and coaching services to advisors, because financial transitions, both good ones and bad ones, can be trying in ways that individuals can’t foresee. “When life changes, money changes, and when money changes, life changes,” Bradley says.
After a few sessions with Bradley, Mitchell says, she was able to get on with her life and figure out what to do with her new money.
Why should advisors care? Bradley says that though sudden money is often the catalyst for hiring an advisor, it’s also often the trigger for ending a relationship and switching to a new firm. Advisors need to pay special attention to their women clients, as they are more apt to make a change under stressful circumstances, she adds. See Why women advisors just aren’t buying what advisors are selling.
“It’s a great opportunity as well as a peril if advisers are not prepared,” Bradley says. “Clients don’t feel heard, seen, taken care of or understood during (transitions).”
Bob Greenberg, principal of Greenberg|Graham Advisors, in Irvine, Calif., turned to Sudden Money about four years ago when he had a client who was so affected by receiving an inheritance that it was hurting his health.
“Basically everything that was going on in his life was tremendously stressful,” says Greenberg. “I just didn’t feel adequately prepared to help him through the process.”
Get clients to slow down
Advisor clients—Bradley’s firm has 75—are taught and licensed to use Sudden Money’s process to lead clients through their transitions. The financial transition model consists of a framework with various tools geared to clients in various kinds of life situations. Advisors pay a membership fee of $5,100 for the first year. Private clients pay a project fee based on the amount of time devoted to them. The hourly rate is $300, and the minimum engagement is 10 hours. See: Advisor Spotlight: Mark Matson on his $2.7 billion investment coaching business.
The goals include gaining a clear understanding of what’s going on in clients’ lives, physically, emotionally and financially. Another is to get clients to slow down on major financial decisions that will have long-term consequences.
“It’s been extremely helpful in bringing in new business,” says Greenberg of the training, “but more importantly in helping these clients weather the storms they’re in and come out whole on the other side.”
It’s not surprising that clients going through life transitions—particularly those coming into serious money for the first time—are emotionally unsettled, he says.
“A lot of times there are sharks in the water: Other advisors, family and friends have all got their hand out,” he says. “It creates huge issues for these people.”
20% drop in IQ?
Bradley and her colleagues at Sudden Money Institute (there are three full-time employees) base their work upon scientific research, and that research suggests that those going through major financial transitions actually experience a sustained stress response. As a result, their IQs can drop as much as 20%, says Bradley.
The good news, she says, is that advisors can increase clients’ cognitive ability by first of all working to understanding them better, and secondly by presenting recommendations and other information in a way that is easier to understand and remember.
Bradley’s current career began with an epiphany. She was researching a white paper for a law firm representing a class action against Dow Chemical over breast implants.
When she asked the lead attorney how many women would have money a year after they got a settlement or award, she was shocked to hear him say “none.” The women, many of whom had serious health issues, would blow it on cars and other luxuries, the lawyer predicted.
Bradley’s white paper turned into a book, which begat the Sudden Money Institute.
How to keep clients from blowing the money
“I kind of got emotionally involved in the concept,” says Bradley, who sold her advisory business six years ago to pursue her current work full time.
“There wasn’t a financial planning model for sudden money.”
At the risk of stereotyping, Bradley acknowledges that her work pertains more to women clients—helping them through transitions, teaching advisors how to help win their loyalty—than to men. See: How to market to women: Don’t.
The reasons for the imbalance are multiple, and include the fact that women need more communication and understanding as they move through a transition, she says.
“Women are more willing to process around a life event, and they want someone to ‘get’ them,” says Bradley. “Men have a tendency to just want to know what to do.”
And in the case of many divorced and widowed women, being the point person with an advisor is an unfamiliar experience. It’s also new for many advisors, she says.
“You could generalize that when a couple uses an advisor, the advisor probably has paid more attention to the man than to the woman,” says Bradley. “Most advisers, particularly male advisors in the wirehouse world, have no idea why they lose these women clients.”
For her part, Mitchell says that Bradley has found an important niche. See: Which metro areas are the most fertile ground for advisors?.
“This is the greatest generation of inheritance, and people don’t know what to do,” she says. “There has to be emotional support for families going through this.”
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