With Susan Bradley, CFP and Founder of Sudden Money Institute
We’ve all imagined what we would do if we won the Powerball or the big lottery jackpot. Would you quit your job? Buy the Hope Diamond? Hop a plane to Tahiti for life? Dreaming may dish up thoughts of a grandiose lifestyle or an outrageous purchase. However, rarely, if ever, does it trigger warnings about the all-too-common pitfalls and traps awaiting the uninformed big-money winner.
So, What DO You Do If You Win the Lottery?
CFP Susan Bradley, founder of Sudden Money Institute knows more than a thing of two about this subject. She joins the show to share her wisdom with Steve. If that one-in-a-million-or-more win occurs, there is tremendous value in having a personal financial system already in place. If, however, the big winner has an unsophisticated relationship with money, very bad things could happen unless he or she follows Susan’s advice.
Keep It Quiet
First of all, Susan warns against yelling the news from the rafters that you’ve just come into bushels of cash. The fewer people who know, the better for the lucky ticket holder. It’s no urban legend that people come out of the distant family tree, if not those rafters, in these situations, begging for a piece of the pie. But it’s not just friends and family to be wary of—financial people, attorneys, and scammers can all prey on the unprotected winner.
Change Your Number
Susan’s additional advice is to get a new cell phone immediately and screen all of your calls, photograph the front and back of the ticket and put in a secure place (possibly a safety deposit box), and then go for advice. She recommends researching to find an attorney and financial advisor who are trained in dealing with this kind of thing.
Such an abrupt and dramatic change in a person’s life can lead to sleep problems, and being sleep deprived is a setup for bad decision making. Susan advocates slowing down the process and holding back on the commitments.
To better illustrate her advice, Susan came up with the four stages of transition, which applies to all cultures and to all life-changing events.
Four Steps to Take If You’ve Just Won the Lottery
Stage One is the anticipation stage where you reconcile the event that is changing your life and begin to shift away mentally from the old way to the new.
Stage Two is when the life change has actually taken place and there’s no going back to the way it was before. (This applies to divorce or retirement, just as well as to winning the big lottery ticket.)
Stage Three is passage, which if you’re the Powerball winner could be when you’ve engaged qualified and trusted professionals to steward your money, but life doesn’t yet feel normal. You haven’t quite adapted to the shift and this phase can take years, no matter what the circumstance.
Stage Four is when you’ve arrived at a place of renewal, have embraced a sense of optimism, and are confident that you can navigate through these new waters for the rest of your life.
Susan advocates seeking the best professional help no matter what occurs to dramatically change your position in the world.
Disclosure: The opinions expressed are those of the interviewee and not necessarily United Capital. Interviewee is not a representative of United Capital. Investing involves risk and investors should carefully consider their own investment objectives and never rely on any single chart, graph or marketing piece to make decisions. Content provided is intended for informational purposes only, is not a recommendation to buy or sell any securities, and should not be considered tax, legal, investment advice. Please contact your tax, legal, financial professional with questions about your specific needs and circumstances. The information contained herein was obtained from sources believed to be reliable, however their accuracy and completeness cannot be guaranteed. All data are driven from publicly available information and has not been independently verified by United Capital.
Steve Pomeranz: With the recent Powerball excitement, I thought it would be a good idea to live vicariously for a moment and imagine what you would do and what you should do if those six numbers ever came up in your life. Susan Bradley is the founder of the Sudden Money Institute and a recognized thought leader in what is referred to as Financial Transitions Planning. She’s also a CFP. Hi, Susan. Welcome back to the show.
Susan Bradley: Thank you, Steve. A pleasure to be with you.
Steve Pomeranz: We’re just talking about lotteries, and as astronomically unlikely it is ever to win something like the lottery, we all dream about how our lives would change if we did, but even our dreams can turn sour if we don’t know the right things to do. What comes first, managing the money or managing your life before you get the money?
Susan Bradley: Well, it’s always a good thing to be managing your life because we don’t know if you’re going to get the money. Those who have a good personal finance system in their lives generally fare better when they do win the lottery. That would be nice. The first thing to do is to acknowledge that your life has changed probably forever, and maybe for good with some intention, but to really be very aware of this change that’s occurring to you so immediately.
Steve Pomeranz: Let’s just say that I’ve looked at my ticket, and I have the six winning numbers. What’s the first thing I should do? Who should I share this with?
Susan Bradley: That’s the hard one, isn’t it? We all want to bring that news out to everybody. It’s very hard to contain it. You want to keep the list really short. This is a time to go under the radar. Share it with one person, so you have someone to talk to about it. Maybe there are two people because you have a family unit. You want to really keep it quiet.
Steve Pomeranz: I guess everybody wants a piece of you now. Financial people are going to be calling. All your friends and relatives who really, really, really love you now want to get in touch with you. How do you protect yourself from that?
Susan Bradley: We take about two to three months to prepare someone to claim their winnings. It’s very tough to keep it under wraps for that period of time. We’ve had people do, it but it has its own stress level. What you want to do is you want to narrow down the contacts that you get. We tell people to get a new cell phone right away. They can keep the old cell phone if they want to, but have a way that the people on your very short list, your inner circle, can stay in touch with you. Everybody else you can return messages here and there if you want to.
Steve Pomeranz: Okay. Now you’ve got this ticket, and it’s kind of scary I would think. You’ve got this ticket worth so many millions and millions of dollars, and I know the first thing I would do is…how do I protect it? I don’t want to lose it. What should you do with that ticket?
Susan Bradley: I think the best thing to do these days is to take a picture of the front and of the back, sign the ticket, then we always want people to put it in a safe place. The ultra-safe place that comes to mind is a safe deposit box at the bank, which is a very foreign thing for some people to do if you don’t have regular banking relationships. If you’re not going to do that, put it into some place where it is protected from water and fire and someplace where you’ll remember where you hid it.
Steve Pomeranz: That’s something like I think I would do. What about getting help? Who are the first line of Bradley on 2016-03-04 at 13.02 professionals you should start contacting?
Susan Bradley: Lottery winners always talk about the outreach part of it. They’re afraid. They have low trust. They’re afraid of what they’ve heard about in the media. They tend to stay within their circle of acquaintances. It could be the neighbor’s brother-in-law or something like that. The strange part of that, Steve, is that most of the attorneys and CPAs and financial advisors are not trained in dealing with this. Given that as a reality, people still want to be with someone that they have some connection to. The most common person they reach out to first is an attorney. The second then would be the financial advisor.
You have to have someone who is trained…where you would benefit greatly by someone who is trained to have these initial conversations and help people sort through all the whirlwind that’s spinning around them before they start making decisions. We’ve spent 16 years on this training. It’s trickier than it looks. Most people think winning the money is easy, money is good, and more is better, like that.
Steve Pomeranz: Yeah, more money, more problems, more things to consider. One of the characteristics that you mention in terms of the first things that you should do is watch your sleep behavior because you may lose a lot of sleep thinking about it from the excitement and all that. But sleep can lead to bad decisions, right? Lack of sleep.
Susan Bradley: With all of us, right? We’re not at our best when we’re sleep deprived. I was working with one lottery winner, and I was asking how they were sleeping, and they were not sleeping at all. Then they went to their doctor to get some help in sleeping, so they were taking some medication. They said, “We went from not sleeping to pretty much sleeping all day. We had sleep hangovers.” It’s a hard thing to balance. The heads-up on it is to know when you are sleep deprived you don’t make your best decisions, so slow down the decision-making process. Try and step back from it. Think about things. Wonder about things. Don’t do things like buy houses and make commitments to other people, particularly when you’re sleep deprived.
Steve Pomeranz: Right. Let’s stop for one second and let’s just take a look at the phases and the other information so we can take us through … We’ve got about four minutes left.
Susan Bradley: Okay.
Steve Pomeranz: Let’s look at this. We just printed it out. The three phases of the Sudden Money process. There’s now four phases…rather, I see that.
Susan Bradley: Yeah.
Steve Pomeranz: I have three lottery winners, …do not have an anticipation stage. What are the four stages? What are the names, so to speak?
Susan Bradley: The four stages of a transition for all of us—in all stages, in all cultures— is there is generally an anticipation stage. That’s the anticipation of an event and of the financial change. There’s an ending stage when the event happens, and that’s when the money is being transferred and lots of things need to be done, so it’s a heavy-doing time. It takes about a year to get that completed. Then there’s passage stage. That’s an adaptation time and adapt to the new way of life. That takes years. It’s always measured in years. Then eventually people emerge into a new normal. If the work was done properly in advance the new normal is a time of high energy, feeling renewed, feeling feet on the ground, knowing how it works. Just a really great time.
Steve Pomeranz: That’s great. That’ll take us through most of the four minutes. Let’s see what is this, decision-free zone? What is that?
Susan Bradley: Most important about a decision-free zone is it’s not a no-decision zone. It’s a time to step back and sort and prioritize what’s going on. There’s usually a lot of things happening at once. Personal, financial, relationship, gifting, all kinds of things. We prioritize by timelines and urgencies. We deal with a few urgent things first. Then we take our time with the things that are not so urgent. We divide into now, soon, and later categories.
Steve Pomeranz: Okay. Good. Let’s see, feeling your windfall, the chute of emotions. What’s that?
Susan Bradley: There are lots of emotions. This is the personal side of a Sudden Money experience. It’s where relationships and stress and hopes and dreams and fears are. We found that all decisions have an emotional component. The job of the financial transitionist, the certified financial transitionist, is to understand the emotions, be able to name them and know how to manage the challenges and support the positive emotions.
Steve Pomeranz: Okay, we’re going to stop there. We’ll pick it up now and we’ll go through the four phases of the Sudden Money process and we’ll take it just as you said, okay?
Susan Bradley: Okay.
Steve Pomeranz: All right. Here we go. You know, Susan, in your writing you’ve organized this quite well and…
Susan Bradley: Thank you.
Steve Pomeranz: …you certify individuals to work in this process, and you’ve put together four phases of the Sudden Money process. What are those four phases?
Susan Bradley: The first phase of the financial transitionist’s process is what we call it now, Steve, the first one is anticipation. That’s when someone is mentally engaged and anticipating this shift. It could be their inheritance or their retirement, the sale of their business, and they have expectations and are starting to make either firm or implied commitments. They’re starting to shape their life and get ready to make these financial commitments before the event has even happened.
Steve Pomeranz: Okay. We all have these anticipation events, sometimes kind of anxiety, as we’re wondering what any kind of new thing in our life is going to mean to our lives. What is the second stage then?
Susan Bradley: Ending stage is the second stage, Steve.That’s when the event is happening. That’s when the divorce is final or the retirement has happened, the business is sold. It’s a time when accounts are being transferred, your estate plan is being readjusted. You’re looking at all the areas of financial planning as well as relationships and charitable gifting. There’s a lot of doing and thinking and processing during that stage. It’s a time when you usually can’t go back to the old way of being. What was is over and what will be hasn’t happened.
Steve Pomeranz: Now once you pass through this ending stage, you go to the third stage which is what?
Susan Bradley: Passage. It’s a great word to describe what happens. You have a lot of the doing done, and you maybe have a portfolio arranged and things like that, but life doesn’t feel normal yet. You still feel uncertain in some areas, and you have ups and downs and maybe you change your mind a lot.
You’re still adapting to this new stage. There’s something about our make-up and our culture, Steve, that consistently creates a fairly long passage. It’s usually measured in years. Sometimes three and four, sometimes six, seven and eight years of adjusting. That’s when relationships shift around, maybe portfolios change, and lifestyle changes. It’s a very important time to have a guide to help you figure it out. It’s not just the technical stuff.
Steve Pomeranz: I guess the final stage is now everything is the new normal, as you put it.
Susan Bradley: It’s a lovely time. It’s when you have figured it out. You’ve adapted. You’ve made the shifts and re-defined, and reinvented, re-imagined. It’s a time of … people usually feel energetic. They’re very collaborative. They’re confident. There’s a sense of renewal and optimism. You know one of the most important things about that, Steve, is that people realize that it was a chore, and a delightful chore, hopefully, to get there. They know that when life changes again on them, they know how to do it.
Steve Pomeranz: You can see I’ve been talking with an expert in this particular field. It’s a complex field, and it’s a field unto its own. My guess is Susan Bradley, and the website is Suddenmoney.com. Thank you, Susan, for joining us.
Susan Bradley: Great pleasure, Steve. Thank you.