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(Doral Chenoweth III)
(Doral Chenoweth III)

Expert's Podium

Handling a 'sudden wealth' event Add to ...

It's the kind of story that's ready-made for Hollywood. Ted Williams, homeless and destitute, is "discovered" by a roving TV reporter. The reporter files a story in which Mr. Williams demonstrates his "God-given voice." The next thing you know, Mr. Williams is famous. He records commercials. He's invited on the Today show. He's the new announcer for the Cleveland Cavaliers NBA basketball team.

Mr. Williams' wealth has almost certainly grown exponentially in a very short period of time, a change that appears to have been hard to deal with. In fact, in an interview on the CBS Early Show back in early January, Mr. Williams confessed he wanted a "nerve pill," presumably to handle the stress. Since then, he's had a run-in with the police, who were dispatched to a restaurant to settle a shouting match between Mr. Williams and his daughter.

Over the course of my career, I've worked with dozens of people who have gone through similar "sudden wealth" events. Most have been entrepreneurs who have sold a long-held operating business. But I've also worked with several heirs, a handful of professional athletes, and even a couple of lottery winners. Many of these people have had to adjust to life changes that were just as complex and disruptive as the changes Mr. Williams seems to be facing.

Everyone's experience of wealth is unique, but here are some of the changes commonly brought on by a sudden wealth event. Hopefully, this can be relevant not only for business owners and executives, but also to those who may one day sell their homes, receive a large inheritance, or experience some other windfall that significantly increases their net worth in a short period of time.

Personality changes

It's easy to understand how a sudden wealth event can leave someone stressed and overwhelmed. In fact, I've seen cases where these emotions manifest themselves physically - through insomnia, loss of appetite, headaches, etc. In this respect, Mr. Williams' comments about feeling out-of-control seem perfectly normal.

While the intensity of these emotions can sometimes lead to a shift in personality, I think it's more accurate to say that wealth amplifies personality rather than changes it. I've seen several examples of this: a business owner noted for his charity suddenly wants to give away 99 per cent of his wealth after he sells his business; a couple known for being private suddenly turn into recluses, obsessed with protecting their personal security.

Something that can help here is a personal "time out" - a three- to six-month break, in which you put major life decisions on hold and keep your daily routine as normal as possible. This will give you time to adjust to your new circumstances.

Identity changes

The question "what do you want to be when you grow up" can be a hard one to answer. It can become even harder after wealth gives you the ability to leave your old life behind. I've found this can be a particularly poignant issue for business owners, who can feel "lost" after selling their life's work.

As Mr. Williams has discovered, dealing with one's public identity can also be difficult. Athletes, entertainers, and lottery winners can quickly realize how hard it is to live up to public expectations. Or down, for that matter: I remember the experience of several executive clients during 2007-08, when many people blamed the financial crisis on corporate greed and boardroom hubris. The hostility these executives experienced was alarming and unsettling to them at the time.

Re-engaging with existing social networks - business associates, colleagues, lifelong friends - can keep you grounded at a time when other elements of your life seem strange and unreal.

Relationship changes

Even if you believe your wealth hasn't changed you, it can sometimes change the people around you. Friends and family members can view your windfall with envy or jealousy. Others can view you as a private bank, making requests for handouts or other financial support, and become cold or even hostile should you refuse.

I know of several business families where succession has led to long-lasting conflict. When different branches of the family are treated differently by the founding generation, some family members can perceive the inequality as a sign of parental favouritism. That kind of injustice (either real or imagined) can often take a lifetime to overcome.

If you expect to go through a sudden wealth event, consider letting friends and family know. A simple conversation can send a powerful message about the value you place on your relationship and defuse conflict before it begins.

 

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