One of the more perplexing challenges facing us as advisors is helping clients regain equilibrium after a financial upheaval. Usually this turmoil is caused by sagging investment portfolios, though sudden wealth can trigger as much angst and misery as a staggering loss.

Stories of people who suffer personal tragedies or are penniless within a year after winning the lottery are commonplace. Their euphoria quickly turns to confusion and distress when their privacy is invaded by an endless procession of long-lost relatives, schemers and freeloaders. Their personal history becomes a public narrative for the media. They can't sleep, can't control anything. They become depressed and solitary. It all happens so quickly that the emotional trauma simply overwhelms many of them.  

They need to escape. The money now feels like a curse. So they find a way to get rid of it, often self-destructively. They desperately need to get back some normalcy, but how?

It's not only lottery winners who have this problem. This type of behavior can occur after any big financial windfall: an inheritance, proceeds from the sale of a business or even a big promotion with a significant income boost. All of these things can create unexpected emotional turmoil. Maybe people are cashing in a 401(k) and for the first time must think about what to do with a large sum of money. But their fear of losing some or all of it by making hasty financial decisions can make them paralytic.

A different but equally complex issue is what happens to those people who quickly lose a lot of money, perhaps those who lost a great deal of their accumulated wealth in the past year because of bad investments or the failing economy. These people also face a new and frightening reality.

Whether it's caused by a boon or a bust, people's fear of the unknown can be debilitating. Sudden wealth or loss jolts their mind-set. It causes unexpected stress and makes it difficult to think rationally. As a result, people's decisions tend to be rushed and the outcomes of those decisions poor. Even innately confident people discover they no longer trust their own judgment when confronted with momentous decisions they've never had to make before.

Remember when you were a child and dreamed there was a monster hiding under your bed? That's how people in financial transition feel. The unknown becomes a monster under their bed and they don't know how to deal with it. They don't realize there is a process to help them understand it, measure it and get through it. All they know is they feel terrible and their monster keeps getting bigger and more frightening. They need to find normalcy-a new, post-transition normalcy.

My first discovery of a process to help clients facing these situations came through an association with Susan Bradley, founder of the Sudden Money Institute. She was one of the first financial professionals to recognize the impact of sudden wealth. It was shortly after I began to apply the principles she advocated that I discovered they were also useful in helping clients who had suffered a sudden financial loss.   

Managing financial transitions for these clients calls for a structured process that helps them manage change, not just circumstances. People in transition must be able to recognize what it is they fear, what they can control, how to prioritize their problems, how to find normalcy and how to adjust to a new reality. They need a process they can believe in so they can find peace, one that helps them escape the world of imaginary monsters and return to rationality and a realistic level of optimism regarding their future.

This can be difficult, especially when there is lots of pessimism. People can be seriously thrown out of balance by their environment or the influence of those they come into frequent contact with-friends, family and co-workers who distort their worldview. A person can continuously hear so much pessimism from others around her that she becomes convinced, whatever her plan may be, that it can't possibly be working.

The first step in the process is to reduce anxiety and lessen the person's fear of making mistakes. It's fascinating that often when I sit down with clients and objectively review their plans, I find in many cases that they remain solidly on track to reach their goals. Most of the time, when we accurately measure these things together, the clients discover that they are better off than they thought, the sky is not falling on them, and they are not doomed to financial ruin, despite what they have been led to believe by others.

This first step promotes clarity and increased confidence so the situation can be assessed and my client and I can together begin to resolve the issues causing the anxiety. As an advisor and advocate, my value in this collaboration is to help decrease the clients' fear: fear of financial loss, fear of making mistakes, fear of change or simply their fear of an unknown future. At the same time, I can provide value by increasing opportunities, by letting the clients know that they can win the game, by providing the tools necessary to play and by offering directions on how to use those tools.

This process might be compared to how medical triage is employed in a hospital emergency area. When an accident victim or injured person arrives, the staff is trained to quickly assess what damage has occurred, what is the most critical injury and what needs to be done first. Of course, all this information and training is of little value unless the staff has ready access to the medicine and equipment needed to carry out the treatment.

The process of helping someone who has suffered a sudden financial change is very similar. Call it financial triage. As an advocate, you have to first sort through all the issues that are afflicting the person, determine what is critical and what can be controlled. Too often, things get so bad so fast that the person tries to deal with everything, but instead becomes paralyzed and gets nothing done. So the process typically involves helping the person calm down and recover his ability to think rationally, perhaps by creating a temporary "no-decision zone." Once he's reached a level of composure, I can help him address the various issues systematically, starting with short-term, high-impact issues that can be controlled.

This step is vital because it re-establishes some normalcy, promotes sound decision-making and helps keep the sudden financial change from becoming an economic catastrophe. It also shifts the individual's center of influence away from friends, co-workers and the self-serving mass media. It provides an environment of clarity and reassurance where a person can make rational judgments and decisions.    

Obviously, a high level of trust must exist or be created between the advisor and the afflicted client. Trust requires time and patience from both parties. Before the healing can begin, the person has to be willing to openly describe his feelings about what has happened and his fears about what might happen to him as a result. Once these fears have been vocalized, the advisor can help the person determine which ones are real and which only perceived, which are the most immediate or threatening and which can be controlled and managed.

Those advisors who prepare their clients for any sudden financial impact, either positive or negative, are in a better position to help clients. Similarly, clients should have a close working relationship in place with an advisor they trust. When an individual's emotional equilibrium swings out of balance, or when an event of significant financial impact occurs-and these things happen to everyone at one point or another-then the healing process should begin without delay and the normalcy should be restored.