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.

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