Your Life Simplified

Hitting the Jackpot! Managing Financial Windfalls (23:47)

February 19, 2019

Financial windfalls come in a variety of forms, from winning the lottery to receiving an inheritance or even selling a business. Regardless of the sort of windfall received, there are some key pieces to keep in mind. On this episode, we ask Suzanne Wheeler of Mariner to share what she feels to be important considerations when handling new-found wealth. After taking a moment to step back and look at your situation, some decisions Suzanne recommends you make include deciding how the money should be allocated, if you’d like to donate to charity, how you can protect your assets and what changes should you make in your lifestyle.


Brian Leitner: Hello and thank you for downloading another episode of Your Life, Simplified. My name is Brian Leitner, and I’ll be the host of this episode. We’re going to be talking about windfalls of money and that can be defined as a sudden or unexpected, or financial gain. That could be an inheritance or a multitude of different ways in which people receive these windfalls. Regardless of how you receive this windfall, it’s really important to take the right steps and make sure that you know exactly what to do. You’re taking the right steps to protect that wealth and help grow that wealth to help you accomplish what’s most important to you. With that said, I’m very excited to be joined by Suzanne Wheeler, a senior wealth advisor from Amarillo, Texas. Suzanne, thank you very much for joining the show today.

Suzanne Wheeler: Thank you for having me.

Brian: Before we get started on understanding what to do with this windfall and those sorts of things, can you spend maybe 60 seconds and talk a little bit about your background?

Suzanne: Sure. I am a certified financial planner, but also a certified financial transitionist, which is the emotional side of money. So we pick up the technical pieces through the certified financial planner. But there are many emotions that come along with money, and  windfalls would be an example of that.

Brian: Yes, that’s, that’s an interesting blend. Because obviously you need to have the technical expertise to be a financial planner, but the psychology of money is truly fascinating. It’s a fascinating topic. So to be able to bring both those skill sets to the table, that is really interesting. Congrats that’s an impressive background.

Suzanne: It’s been a lot of fun.

Brian: So Suzanne, as we get into talking about the different windfalls, again, whether that be an inheritance, lotto, there are a lot of different ways in which people receive these windfalls. But statistically speaking, you hear about lottery winners, and you hear the fact that, you know, they receive all this money and 12 months later, a couple of years later, they are broke. So is money the root of all evil? I don’t know. But what should people be thinking about? I mean if they do come into a windfall.

Suzanne: When someone comes into a windfall, I think it’s time to step back and breathe.

Brian: Firstly cheer, right?

Suzanne: Cheer and then you breathe, then you know, when you think about it, and think back in time when you had a large sum of money come in, whether it’s large to one person may not be large to another person, but what’s your first instinct? To buy something that you’ve always wanted or to treat someone and that you want to treat. And so I think stepping back and thinking about what could be with that money instead of making the wish list of what you want to spend it on.

Brian: Yes. Because, prior to having that windfall, maybe you had a financial plan and maybe you didn’t. Regardless of whether you did or did not, you had goals, you had dreams, you had aspirations. And depending upon how much wealth we’re talking about, this could completely alter that direction and alter that plan.

Suzanne: Sure, in many instances it can be a life changer for a family. For instance, I’ve had the opportunity to work with several clients who either sold a business and, they’ve worked hard all their life. They finally get this large windfall, and again, large is relative. It could be $100,000 to somebody or it could be millions to another. So, it’s just making sure that you’re a good steward of that money and managing your expectations, as well as the expectations of others. I mean many, many people that win the lottery. The first piece of advice is, don’t tell anybody. You don’t want to tell your family members, or you would be surprised how many friends that you have after they’ve heard you won.

Brian: Without a doubt. They’ll say, “I haven’t spoken to you in a while. How’re things?”

Suzanne: Exactly. Your Facebook likes and friendships go up dramatically.

Brian: I’ll bet. So what are some of the first steps? Walk us through that, if somebody did sell a business or came into some sort of wealth, what are some of the first things that they should be thinking about as opposed to announcing to the world that they just came into a great deal of wealth? How do they protect themselves?

Suzanne: I think they need to get their team of professionals together. And one, starting with a a wealth advisor who can walk them through the areas of goals, what are they thinking about. What would they like to spend their money about on, or, what if they invested—could that change their lifestyle dramatically? And many people whom I’ve worked with, it could. And so, everyone wants to treat themselves. So maybe you designate a portion of those winnings to go out and buy that Corvette you’ve always wanted. I’ve heard people that want to buy a larger home. Well, what comes with that home? There are a lot of expenses that come with it. The maintenance, the keeping up with the yard—you’re not going to go buy a $2 million home and then mow your own yard.

Brian: There are many expectations with that spending. Walking through a plan with someone to show them what could be, how they could have a life set from here until they’re 99 and take care of their immediate family. Or what I always like to show is, how quickly it can be spent, because what we don’t want our clients to feel like is, “Oh, I’ve got all this money and it looks like I’m going to live to 99 and have x dollars left.” That’s how quickly that plan can fail if the guidelines weren’t set and abided by.

Brian: Really maybe stress testing that plan—that makes a lot of sense.

Suzanne: Yes. It’s amazing what a difference that makes and gets people thinking because this is a chance of a lifetime for many, and they want to get it right.

Brian: So as you walk through this process, I mean it’s interesting because you come at it from a couple of different angles. Just with your background and expertise you have, we’re going to map out the goals. Maybe you have short- and long-term goals. Maybe there are needs, wants and wishes as part of that. But you know, you’re talking to folks for whom this could be life changing, as you mentioned earlier. As you mentioned in your background with the psychology of money, it’s about trying to understand what money means to these individuals.

Suzanne: Sure. And asking them what their money story is. A lot of times, we talk about what is their history of money. Have they always had money growing up as a child or have they been operating paycheck to paycheck? It gets back to those little things. You’d be surprised if somebody came in with $10 million, and we upgrade that the house, maybe we don’t buy the $2 million house, but maybe we upgrade to a half a million dollar house or, new cars that can really launch someone to feeling like they’ve won something, and then you’ve got the balance to invest over time.

Brian: Yes, it’s really interesting just again, people’s relationship with money. To your point, what was money like for them growing up and that really dictates a lot of our relationship with money. You have other individuals who may have been living a certain lifestyle, and they’ve been very generous as it relates to donating those funds. Maybe this windfall doesn’t necessarily change their life dramatically, but it could amp up or improve or enhance some of what they’re already doing.

Suzanne: Right.

Brian: So then once they have this plan of action, are there general tips? Like, you don’t want to spend this money in the first three months. You don’t do anything for 12 months. Do you have any, any thoughts around that?

Suzanne: Usually telling someone who has won the lottery that they can’t spend anything for 12 months, they might be looking for a different wealth advisor.

Brian: Good point.

Suzanne: So I think it’s a lot of discussion and of course there are a lot of meetings right away, because the last thing you want to do is meet with them and say, “I’ll see you in two weeks,” because two weeks is a long time when you’ve got money to burn.

Brian: They’re thinking about it every day.

Suzanne: Absolutely. And so, let them gather their thoughts and prioritize what’s most important to them. And if you can show them, you would never have to worry about money again, you’d never have to have a job again. As opposed to, you can go buy the yacht and take five years off, but then you’ve got to start working again. It’s going to be really hard to replace that income in five years in that lifestyle. So with a lot of education, handholding, talking, we can normally get someone on the right plan.

Brian: So Suzanne, earlier you mentioned, maybe that first call being to a wealth advisor, who are the people should you have as part of the team as you indicated earlier?

Suzanne: Well, usually the wealth advisor would bring in a team of professionals if the client didn’t have those professionals in place. Top of mind would be a tax professional. As you might guess, there’s tax to be paid, but there’s always also opportunities of tax planning in the future. And maybe you’re looking at estate tax as well as income tax, and at how the investments are invested so we’re not creating a lot of tax for the client. And then there’s also estate planning. What happens if this lucky winner is hit by a bus next week? What happens to all that wealth? And so making sure that we have those plans in place, and that the money is going to the beneficiary the client wants, or charities—there’s a lot of charitable planning.

Brian: Yes, those are great points. You know, you read about these celebrities who have made a ton of money in entertainment and, a couple of them have gone to jail for tax evasion or just not paying their fair share.

Suzanne: Or someone dies and doesn’t have a plan in place.

Brian: That’s a great point. So, just making sure that, from a tax perspective you are prepared, because a lot of events, such as a sale of a business, could be a taxable event. If you have punitive damages in a lawsuit, that could be a taxable event, whereas perhaps life insurance is generally income tax free. So just trying to understand what the differences are, and ultimately understanding how much you have, net of taxes and other types of fees. You mentioned the attorney, the wealth advisor, the CPA, is there anybody else that you would include on the team?

Suzanne: Insurance. One of the less expensive policies you can buy is an umbrella policy, which is so important with people who have wealth. I mean, we are such a litigious society nowadays. You can buy that policy for nearly nothing. And when you think about a lawsuit happening and the potential for your will being touched by a lawsuit.

Brian: So that’s a great transition. I have this wealth. I’ve been fortunate to receive this and ultimately I want it to go to perhaps a charity. But first and foremost, I think I want to help support my family. So how do I protect myself and my kids? I want to make sure people don’t come after me. And when I say protect it from ourselves, I mean spending the money and blowing it, as I mentioned earlier, the lotto winners who might spend that down. What are some tips to be thinking about as it relates to protecting that wealth?

Suzanne: So, insurance that we talked about, your estate planning and as far as charitable, there are donor-advised funds. If you know someone who is charitable, and you’ve established how much money they could designate to a charity but not run out of money. Because that’s the last thing we want to do. You can always put money in a donor-advised fund, take that income tax deduction right away, and then you can spread the donations out over your lifetime. It’s a great way to get children involved too. I’ve worked with some families where a donor-advised fund is set up, and the children get to advocate for their charity.

Brian: That’s a great way to get the kids involved.

Suzanne: It’s a great way to get them involved and to get them to start thinking about money and wealth.

Brian: Thanks again for downloading this episode of Your Life, Simplified, which is produced by Mariner. We’re here to serve as your advocate. We help people chart a course to reach their personal and financial goals so that they can have greater peace of mind that may lead to a more fulfilling life. We do this by always putting our clients first. So as you listened to this podcast and have questions about your own financial situation or would simply like a second opinion or if you have an idea for a future podcast, please go ahead and email us [email protected]. If you found the information in this podcast valuable, please go ahead and share it with a friend or family member who you think might benefit from this information. And please don’t forget to subscribe to this podcast so you don’t miss an episode. Thanks for listening. And now back to the episode.

Brian: So Suzanne, you mentioned working with these professionals, and you’ve been doing this for quite some time. Can you give us maybe an example of a family who you work with where you leveraged these other advisors that you work with and how that plan comes together?

Suzanne: Sure. One of the best meetings that we have with clients is when we group their professionals all in one room. And we try to meet on an annual basis, because life changes and things change. But in this group, it would be an attorney, a tax person and an insurance person. A lot of times these clients who are new to wealth don’t have those professionals in their life. So I would invite Jennifer Kohlbacher, she’s head of our family office services, Jadin Winberg, head of our estate planning group, and Ed Simms, head of risk management, and bring them around the table. Because we don’t want our clients to have to remember things to tell their estate planning attorney or their tax professional. Everybody has ideas that they bring to the table. So, I think we’re more effective when we work as a team and make sure that we are preserving wealth and not spending it all on tax. And we’ve got our bases covered for protection.

Brian: So, Suzanne, we’ve talked a little bit about those who receive a substantial windfall, like the lottery or something of that nature. And, to your point, the dollar number is relative. But what about when you’re dealing with someone who has come into some money but it’s not enough to go out and purchase that mansion or that fancy sports car. How do you walk them through that process knowing that they should feel really good and they have this great bump, but it may be just a bump. How do you have that conversation or discuss that plan?

Suzanne: One thing that comes to mind when you say that is someone going through a divorce, and maybe they’ve reached that settlement agreement. It is a nice nugget, but it’s not one when we put in our financial plan that will carry them through their lifetime. We can help the client walk through that path of, “this will help you with living expenses for the next three or four years.” If it’s someone who stayed at home and raised the kids their entire adult life, while they retool themselves to be in the workforce, then maybe it’s a supplement to their income. So I think it’s navigating what works and what can be helpful. But it’s not something that they can rely on and never work again.

Brian: Yes, I would imagine too, a major component of that is education. So it could be someone who is divorced, but it could also be someone widowed, right?

Suzanne: Right.

Brian: A lot of times in their households, whether it’s a male or female, somebody is making the financial decisions for the family. And now this surviving spouse who wasn’t that person, needs to make these decisions and sees that they have x amount of dollars now coming in via a life insurance policy. If they’re not used to managing the finances, they may think that number represents something very different than maybe an advisor would when looking at their overall situation, and what they can do with that wealth.

Suzanne: Sure. Again, it’s a lot of communication, a lot of education. Putting the data in the MarinerGPS and showing the client what it looks like—the client may not even have a clue of what the living expenses are. So walking down the path of a spending plan over a period of time and helping someone know what their expenses and the resources are. That’s step one in the plan. And then how do we help them find out what that next career move could be. And a lot of times if it’s someone that has stayed in the home, you look back to those college years or high school years and ask, “what did you have a passion for that you put on hold because you were raising a family? Did you always want to go to nursing school? Did you want to be in real estate and then helping guide them into a career that they can be passionate about. The last thing you want is to be working in a job where you are not fulfilled.

Brian: So that’s an excellent point. So you don’t win the mega millions lotto, but you use this as an opportunity to retool, rebrand and change your career and now you have the funds to invest in yourself to do that. That’s a really interesting way of looking at this new-found wealth.

Suzanne: Sometimes we find ourselves as coaches when you get back to the emotional side of money and a lot of that can be counseling and coaching and inspirational. One thing I’ve always said is, life can be tough and, what I’m very excited about in our teams at Mariner, we help people get through life.

Brian: So Suzanne, great information. You mentioned MarinerGPS. Can you talk a little bit about what that is for our listeners that aren’t aware?

Suzanne: Sure. MarinerGPS is our financial planning software, so we use that with every client who comes in the door. You input the resources, you collect the goals from the client and input those, as well as, we measure risk tolerance. So how conservative do we need to be in the market. And see if all those capabilities align together for a positive outcome.

Brian: Yes, I think one of the, one of the biggest benefits that I hear from clients is just, it helps me get organized with my entire financial situation, and I can have all of the documents I need, at my fingertips and on my phone.

Suzanne: And it’s not “one and done.” We pull it out every year to make sure we’re still on track. Is the client still on track with either saving or spending goals, and are we on track with our returns within the portfolio?

Brian: Suzanne, I want to thank you for joining us today. I think if any of us come into a great deal of wealth or even a small nugget of wealth, I think we’ll have a better idea around what to do with those funds. So I appreciate you being here. And before I let you go, I have to ask you the same question we ask all of our guests and that is, what is the worst financial decision that you’ve ever made?

Suzanne: Oh my goodness. Probably one that I’ve talked about that you shouldn’t do, as we’ve been talking today, but I had an inheritance, and I did not have a financial advisor, and I went and bought a fast car.

Brian: So to your point, you didn’t give it enough time.

Suzanne: I didn’t give it enough time.

Brian: You didn’t meet with your advisors.

Suzanne: I did not meet with my advisors.

Brian: And you went out and had a good time.

Suzanne: That’s right. Didn’t spend all my money.

Brian: Do you still have this car?

Suzanne: No. I kept it for a year and thought, okay, I got that out of my system. It’s time to be an adult.

Brian: Well, listen, appreciate you sharing. We all make mistakes and that was a timely one for this podcast. We appreciate it. Okay. That’ll do it for another episode of Your Life. Simplified. Again, thank you very much for spending the time with us today. If you have comments or questions or a topic that you would like to hear, please feel free to email us [email protected]

Brian: We know that your time is incredibly valuable, and we hope you find this podcast a worthwhile investment of your time. Thank you for listening.

The views expressed are for commentary purposes only and do not take into account any individual personal, financial, or tax considerations. It is not intended to be personal legal or investment advice or a solicitation to buy or sell any security or engage in a particular investment strategy.

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