No. 2 – Going it alone

Americans, accustomed to flying solo when preparing their taxes or making decisions within a 401(k) might also be tempted to take a do-it-yourself approach to allocating or spending their inheritance. Schlesinger argues that many inheritances should involve a team of professionals that includes an estate attorney, an accountant and a financial advisor.

“Some people are constitutionally able to go it alone,” she says. “Once they receive an inheritance, just the sheer amount might intimidate them. Money is emotional, even a CFP professional or investment advisor would probably be better served by a team of professionals.”

No. 3 – Acting too quickly

Clients have dreams and goals, says Schlesinger, and after an inheritance may be tempted to sell their home or quit a job too early in the process. Advisors can help them think clearly about their choices when emotions run high.

“People just want to get the process over with, settle the estate and buy the first idea or product that comes along,” she says. “What’s incredibly important is that the advisor slows things down, then implements a game plan. Even if someone comes in during a moment of crisis like death or divorce, just start with a plan.”

No. 4 – Becoming paralyzed in the investment process

Sometimes, when faced with a windfall and the huge choices that follow, clients are unable to make investment decisions. Schlesinger says that the current bull market, now eight years old, and record equity valuations exacerbate investor inertia.

“This issue is often addressed during the planning process, that’s why it often takes 60 days to finalize and implement a plan after the moment an advisor meets a client,” she says. “If the client is nervous, a planner is probing what they’re nervous about. Show them data that tells them they’re better off investing a lump-sum, but if they’re still reluctant and that prevents you from executing the plan, let them average in.“

No. 5 – Providing for family and friends, but not themselves

Heirs tend to be generous and often want to help their children, friends and other relatives and charitable organizations before thinking of their own welfare, says Schlesinger. Advisors can guide clients towards creating or updating a financial plan before exercising their generosity.

“Even I get stuck on this topic, because it’s so emotional,” says Schlesinger. “This is why people can really benefit from working with someone like a CFP professional, they can help navigate incredibly emotional topics in a reasonable way. If clients keep putting their money out there, they’re not going to be able to meet their goals, we have to be clear about that.”

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