THE SEVEN STAGES OF SUDDEN WEALTH— Douglas Wolford
STRENGTHENING THE FOUNDATION OF YOUR INVESTMENTS | PAGE 1
Live Well S e r i e s
The path to wealth is often a slow one, a journey that takes place one step at a time over the course of several
decades. But for some people, certain events—receiving an inheritance, selling a successful business, winning
the lottery—can create a rags-to-riches experience, seemingly overnight.
When that happens, the results can be both thrilling and confusing. I’ve seen many clients, colleagues, and
close friends go through a period—and a process—of adjustment to sudden wealth that, unless anticipated and
managed consciously, can be very jarring.
The goal of this primer is to provide a preview of the psychological transformation you, or someone you care
about, may encounter when coming to terms with this newfound wealth. And so, with respect to Elizabeth
Kübler-Ross, on whose famous model this primer is loosely based, I offer you what I call the Seven Stages of
Sudden Wealth.
Opening Thoughts: Let’s be clear— there are many, many worse things in life than quickly coming
into money. But sudden wealth does have its challenges. Perhaps the most difficult part is the sense
of isolation: no one wants to hear someone complain about the difficulties of being rich. Thus, it’s
important to connect with a community of people who understand both the trials and privileges of
good fortune, and can help you create a plan for the years ahead. The sooner you can do this, the
more likely you are to come to terms with your new life in a healthy, productive manner.
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Stage One: Numbness and Disbelief
These feelings may be amplified if you come from a modest background. The contrast between what your life
has been and the new direction it is taking may be too overwhelming to process quickly—both for you and the
people around you. Just like any shock to the mind, it takes time to adjust and comprehend the new life that is
just around the corner. Be easy on yourself, and give yourself time to absorb your new situation.
‘Is this really happening? How is
this possible?’ It’s not uncommon to
go through a lengthy period of
numbness and disbelief, particularly
in the period between learning that
a hefty sum is headed your way and
actually receiving it. It is totally
normal to feel like everything is
‘unreal’ or that you are having an
out-of-body experience. Spouses,
friends, and family members may
have similarly shocked reactions.
Stage Two: Generosity and Expansiveness
As you get used to the notion of having money,
it’s natural to want others to become
comfortable with the idea too. In our culture,
there is a growing sense of discomfort about
being richer than other people around you.
This is the time when people often begin
sharing their money with others in an attempt
to make those around them feel as if they are
also wealthy. The intent can be noble—who
wouldn’t want to share good fortune with their
friends and loved ones? But there can be an
underlying sense of guilt at work as well, with
lavish gifts being used to mollify these sordid
feelings.
Stage Three: Puzzlement
The ‘high’ that comes with giving can quickly fade
into puzzlement when loved ones don’t react to
generosity the way we expect. It’s not uncommon for
friends and family to seem unappreciative or resentful
in response to largesse under these circumstances.
On the other side of the spectrum are the loved ones
who become greedy and demand even more. When
either of these things happen, the natural response is
confusion: ‘What just happened? Why have people
responded this way? I haven’t changed—why are my
loved ones and friends treating me differently?’ This
stage can be a profoundly difficult time. It can shake
the core of many relationships and make you feel
Stage Four: Defensiveness, Fear, and Isolation
Unfortunately, puzzlement has a tendency to
transform into a series of even more uncomfortable
feelings: defensiveness, fear, and isolation. It’s easy
to become so disenchanted by the reactions of
others that you can begin to question yourself: ‘Who
am I to deserve this kind of financial success? Why
me and not someone else?’ In many cases, there’s a
powerful urge to avoid these thoughts by limiting
contact with, or completely withdrawing from,
society.
quite vulnerable. Remind yourself: How others respond to you is mainly about them and their views of money,
and not personally directed at you. Try to keep good boundaries between your good intentions and others’
reactions to them.
Close Family Ties: It’s never too early to socialize the notion of wealth with your immediate family if
there is the possibility of a sudden wealth event in your future. The conversation can be open-ended:
‘One day, I plan to sell this business. What do we want our life to look like if that happens?’ Better
to have a series of short, lighthearted conversations early in the process than to discover later on that
you and your family have drastically different ideas of how you’d like to lead your lives.
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This stage is one of the most dangerous periods of the sudden wealth process. Some people will breeze through
it. Others are never able to move past it. People with modest upbringings, for example, may yearn to recapture
the simplicity of their blue-collar roots. They may even feel that money has ‘ruined’ their lives, or the lives of
their children. These are understandable reactions, but if acted upon, they can lead to escapism. In some
cases, people try to deal with these emotions by hiding their money from their friends and family and ‘acting
poor’, completely cutting off all connections to their past life, or becoming paranoid and overly protective of
their loved ones.
What’s important here is to continue to engage, even if engagement is difficult. You may want to return to
simpler times, but in reality ‘you can’t go home again.’ The only way out is forward.
Stage Five: Questioning and Seeking
For those able to transition out from the last phase, they find that they’ve entered a period of questioning. ‘What
does all this wealth really mean? Was money the end goal of my work, or was there something else? What do I
really want out of my life going forward?’ Most often, these are the sorts of questions we don’t have time to ask
ourselves when we’re building wealth or just trying to cover the costs of running a business. And besides, most
people don’t ever really think they’ll have enough money where working becomes optional.
Stewardship vs. Ownership: Here’s one of the big questions at the heart of the sudden wealth process— are
you going to let the money own you, or will you act as a steward of the money, guiding it toward the people
and causes you deem appropriate?
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At this point, it becomes clear that money is a magnifying glass: it doesn’t fundamentally change you, it just
amplifies the qualities that were always there. People who were unpleasant before becoming wealthy usually
become maniacs afterward; and people who were already caring find even more channels for their positive
energy. This questioning period is an opportunity to ponder that phenomenon, and to begin thinking about what
you want to do with your life—your new life.
To this point, acceptance comes first and
then gratitude. You have to fully
comprehend the fact that your life has
changed and that there’s no going back. Just
remember, it is up to you to determine how
you live—seeking approval from the people
around you will just end in unhappiness,
while attaining the kinship of others with
similar circumstances can be very
powerfully affirming. Those people who are
meant to be in your life, will be—with or
without regard to your money.
Stage Six: Acceptance and Gratitude
I knew someone, a close friend and colleague, for whom sudden wealth was initially very challenging. She is a
sensitive and giving person and whenever someone came to her with a difficult situation, she opened her wallet
to help. But giving money rarely solved the problems at hand. For her, part of the acceptance process was
acknowledging that she needed to establish boundaries between herself and other people. She learned that she
could commiserate or offer other forms of support without having to involve money.
It is only when you have fully internalized acceptance, that you can become truly grateful for such an amazing
turn of events. Now there is time and emotional energy to pause and reflect on how strangely wonderful life can
be, and how fortunate you are to have access to the resources to live well. You have the power to make a
lasting, positive imprint on your circle of influence—family, friends, and the world-at-large.
What do you want to do with your life? It’s possible you haven’t asked yourself that since you were a teenager.
But now, you have a golden opportunity to figure out exactly how you want to conduct yourself in the years
ahead. I have found that when you can choose what you do every day, the things you do become incredibly
more meaningful.
Stage Seven: A Sense of Purpose
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Disclosure: Past Performance Is No Guarantee Of Future Performance. Any opinions expressed by Convergent employees are current only as of the time made and are subject to change without notice. This article may include estimates, projections or other forward looking statements, however, due to numerous factors, actual events may differ substantially from those presented. While we believe this information to be reliable, Convergent Wealth Advisors bears no responsibility for the advice or information provided in this article whatsoever or for any errors or omissions. Moreover, the information provided is not intended to be, and should not be construed as, investment, legal or tax advice. Nothing contained herein should be construed as a recommendation or advice to purchase or sell any security, investment, or portfolio allocation. This article is not meant as a general guide to investing, or as a source of any specific investment recommendations, and makes no implied or express recommendations concerning the manner in which any client's accounts should or would be handled, as appropriate investment decisions depend upon the client's specific investment objectives. Non-deposit investment products are not FDIC insured, are not deposits or other obligations of City National Bank, are not guaranteed by City National Bank and involve investment risks, including the possible loss of principal.
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People who don’t go through
this final step often end up back
at work right away because they
don’t know what else to do with
themselves. They say they miss
the ‘game’, and maybe they do.
But they may also be missing an
important opportunity to live life
with great intention, instead of
reverting back to familiar
patterns. It takes time to reflect
and figure out exactly what you
want to do. Take the time
needed to make an honest
personal assessment.
And if going back to work is the answer, wealth can provide a sense of freedom in which you can live the
answer to the question: ‘What would you do in life if you knew you could not fail?’ Wealth can provide a sense
of purpose, and a humility about being one of the truly fortunate on this planet where so many are far from
fortunate. Whatever you decide to do with your new wealth, and your new life, it will be a joy if you approach
it consciously and with intention. Best of luck along the way!