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!