Mapping the Territory of Financial Transitions

An Interview with Susan Bradley
Interviewed by Pamela Gerloff

MTM: You work with advisors who help their clients deal with large amounts of money. Are the challenges different, depending on whether the money comes suddenly or over a period of time?

Bradley: It depends on how prepared people are for coming into wealth. It's logical to assume that an unexpected windfall would be more difficult to manage and an entirely different experience than inheriting or selling a business. Yet each has its own challenges, and often, inheritors and business owners are as unprepared as lottery winners to handle the new money in their lives. When new money arrives or old money becomes your responsibility, you are presented with new choices, new duties, and perhaps a new identity. Many people are surprised by the emotions and confusion that arrive with their new financial position.

Unprepared inheritors who haven't earned the money themselves can have self-esteem issues and lack confidence. They may wonder, "Who am I besides money?"� Some families prepare their children poorly; for example, by telling them to be careful that people don't take advantage of them. Children are often taught to stay within their economic groups. When they try to break out, there is a lot of confusion and suspicion.

Those who have built their own wealth tend to have confidence and self-esteem, but they may be overly identified with the business. When the business isn't there, they're not sure who they are. Families I have worked with who sold their business didn't see themselves as wealthy while they were building it up. They may have had $100,000-$250,000 salaries, but now they sell the business and have $40 million. That's a big transition. Wealth maintenance and going through the transition to having wealth require a different skill set than creating wealth.

MTM: Do you then advise inheritors and entrepreneurs differently about preparing for and handling wealth?

Bradley: Initially, we called our planning process "the sudden money process,"� but the longer I worked with people and their transitions to larger amounts of money, the more I realized that the underlying challenges are not about sudden money, they are about the life transition that sudden money creates. The common denominator among inheritors, entrepreneurs, and people who have come into money through a sudden event such as a lottery or insurance settlement is the transition to a new stage in life and a shift in their own identity.

So, although there may be some differences in the types of challenges faced by inheritors and those who have acquired their money in other ways, the underlying challenges and the approach needed to address them are much the same.

MTM: What approach do you think is needed?

Bradley: I think people need to recognize that they are in a life transition, and the financial planning process needs to respect the uncertainty and confusion that can come with such transitions.

Different people respond differently to life transitions. I think of them as falling into three categories: (1) those who take life transitions in stride, (2) those who go through a turbulent period of emotions and indecisions, and (3) those who come unglued. I would say that traditional financial planning models—which focus on the more quantifiable aspects of financial planning, such as investing, tax planning, and cash flow management—are more suitable for people in the first category. They tend to view their experience as, primarily, a financial change of life.

People in the second and third categories tend to experience the transition as an emotional experience that has financial components to it. In many cases, they are not ready for traditional financial planning until their emotional climate settles down and they figure out who they are and where they want to go. They need to address the more subjective side of financial planning first, which involves identifying values, beliefs, dreams, and goals.

I believe that both the objective and subjective sides of financial planning are needed during the life transition process that money initiates. The degree of emphasis given to each side will depend on the needs of the individual in transition.

MTM: Do these transitions follow a predictable pattern?

Bradley: By definition, transitions are finite; they have a beginning, middle, and end. What happens during the middle stage determines whether or not the transition is successful. I refer to the middle stage as the junction point—that in-between time when what was no longer exists and what will be is not yet formed. These are the pivotal times that will cause a permanent change—for the better or not.

MTM: How do you help make the change happen for the better?

Bradley: To enable a successful transition, you need to create a "safe place"� for exploration during that middle stage. This can be facilitated by making two key agreements, with both yourself and your financial advisors.

The first is an agreement that something big is happening. You acknowledge that this is a time of change and opportunity requiring a careful planning process. The second agreement is to establish a "decision-free zone,"� in which you give yourself permission to postpone all but the essential decisions. This is a time to concentrate on self-exploration, preparation, and planning. It's not a time for new commitments, long-term investing, or irrevocable decisions.

I think of life as a river. As you go along, you become adept at managing various water conditions—rapids, high water, low water, and so on. However, when you come to a waterfall, you need to step out of the river and decide how you will navigate this major event. Once you are out, it is easier to assess the waterfall, make navigational decisions, and determine how you will re-enter the river to continue on with your life journey. Life transitions come in all sizes of waterfalls. They offer an opportunity to step out of the normal flow of life and make a new plan. The stepping out of the river is the decision-free zone.

I would recommend that in the safe space of the decisionfree zone, you craft a purpose or values statement that becomes your personal benchmark for testing the importance, priority, and appropriateness of your ideas and goals. I call this your "touchstone,"� after the small black stone known as a touchstone that was used in the 15th century to test the authenticity of gold and silver. This helps you create a strong sense of self, which is the most important element of a successful transition, because it acts as an anchor in the storm of change.

MTM: It seems as if you would need a strong sense of self to be able to tolerate a period of uncertainty and confusion during the transition.

Bradley: Yes. For lots of people, it's intuitive to quickly move away from pain, to remove yourself as fast as possible from something that's uncomfortable. However, the desire to move quickly through the life transition is actually the cause of much of the problem. That is when you tend to leap to quick, emotions- based decisions about investing, moving, or rearranging relationships. You think that the faster you deal with the money, the faster you will feel better again. For many of us, it's counterintuitive to slow down and pay attention—we're not culturally conditioned for that. We're trained to be in forward motion: achieving, buying, giving. We're always in an action state. But to get safely through the transition requires stepping out of the action state. And to do that requires a strong sense of self, because you don't have anything else on which to anchor yourself.

MTM: It would seem that the uncertainty could be particularly hard for business people, who may be used to being decisive and in control.

Bradley: Yes. Entrepreneurs are frequently good decisionmakers. So, feeling indecisive about what to do with their time after their business is sold, or experiencing the loss of the identity they built through their business, can sometimes produce completely unfamiliar emotions.

I think it's important to really honor yourself when you're in a transition and know that the chaotic aspect of it is a great thing— the chaotic process is how most growth happens. I've found that it helps to see the chaotic process as a good thing, not a bad thing. If you just focus on the financial aspects of planning, rather than on self-discovery, you might come up with a good plan in terms of growth of assets, but if it doesn't fit the new self that is emerging in the life transition, the plan won't last.

MTM: Would you say more about what you mean by the chaotic process?

Bradley: In natural science there is a theory regarding the three stages of chaos that organisms and other natural systems go through as they evolve. I've found it useful in understanding life transitions around money because it provides a map and a framework for understanding the stages of a transition.

Stage 1: The first stage is an oscillation between two opposites. For example, you might vacillate between feeling I want to move and buy a big home/I never want to leave this house; I want to retire and play golf/I want to open a new business; I want to get divorced/I don't want to get divorced. Stage 2: The second stage is the time of unpredictable behavior within boundaries—disorder within order. This is when the emotional intensity and confusion build. Until you actually have possession of the money, you're just planning. But once you have the money, you can carry out your decisions, which will have real-life consequences. That creates an escalation in the emotional climate, and that's when you see full-blown chaos—or what can feel like chaos. Your own behavior may seem random and inconsistent. There may be a breakdown of social and family contracts, as old relationships no longer seem to fit and new ones haven't yet emerged. You may act out emotions without regard to the consequences. You may change your mind a lot. In this middle stage, you may hear financial advisors and attorneys say things like, "Tell me what you need. Let's map out a plan."� The trouble is that people in transitions aren't usually ready to be that decisive. If you do make a plan at that stage, you're likely to change it later. It's a difficult time for both the individual with the money and the people who are lending leadership and guidance.

The keys to navigating through the second stage are the agreement that something big is going on; the decision-free zone, which helps contain the chaos and

Stages of Chaos: The Transition Process According to Susan Bradley, director of the Sudden Money Institute, financial transitions usually involve three predictable stages: Stage 1: Oscillation between two opposites , e.g., You may feel: I want to move and buy a big home/I never want to leave this house; I want to retire and play golf/I want to open a new business; I want to get divorced/I don't want to get divorced. Stage 2: Unpredictable behavior within boundaries— disorder within order. You may experience random or inconsistent behavior and/or confusion and uncertainty as things are changing. You may act out emotions without regard to consequences, and you may find yourself changing your mind a lot. Stage 3: The "new normal."� A renewed, somewhat different sense of self emerges, which now becomes your "normal"� touchstone, from which you can make the practical financial decisions you will need to make.

make it manageable; and developing a strong sense of self by discovering and focusing on your values and beliefs. All these will help you anchor yourself in the storm.

Stage 3: If the anchor is strong, all of the seemingly random behavior will eventually result in the emergence of a brand new form, which is the third stage of chaos: the emergence of the "new normal."� This involves a renewed, somewhat changed sense of self, which now becomes your "normal"� touchstone, and from which you can make the practical financial decisions you will need to make.

MTM: Do you think everyone experiencing a "sudden money event"� goes through this chaotic process?

Bradley: I have never met someone who had a sudden money event who didn't say, "I know a lot of people make stupid mistakes, but I'm not going to."� Everybody starts out thinking they'll do O.K. They all have ideas, like: "I'll invest it and make a lot and will never lose anything."� "I'm not going to change."� Or "I'm going to change everything."�

I've observed, however, that whatever people say when shooting from the hip is usually the opposite of what happens, because they haven't thought it through yet. I will consider myself successful when there is a general feeling in the world that these life transitions are big life events and people going through them need to find expert guides. I would like to see families and individuals acknowledging, "Here is a life transition and I need help."�

Keys to a Smooth Transition Acknowledge that "something big is going on."� Establish a "decision-free zone,"� during which you give yourself permission not to make any decisions, while you explore new possibilities. Clarify and focus on your values and beliefs, to strengthen your sense of self.

MTM: How do you know if a potential financial advisor understands the importance of the transition process and can guide you through it?

Bradley: First, I would say to look for someone who works with people in life transitions. At the Sudden Money Institute, we have a whole network of advisors to whom we refer people, and there are other networks and other advisors out there. They might not use that specific terminology. If they work exclusively with a particular clientele, like inheritors, business owners, or divorced people, for example, they may be more likely to be aware of the transitions that such people go through.

For myself, I would like to be with an advisor who knows the territory I'm about to enter, someone I feel I can trust, someone I can talk to and communicate with, someone who gives me the right signals and hears what I'm saying. I want someone who is there to help me process some of what's going on internally, as well as someone who can do the technical stuff.

You find those people by asking questions. You say, "Here am. What do you normally do with a person like me?"� Then notice how they respond. Do they try to get to know you? Do they find out what your goals are? Or do they focus on giving you information? If they say, "Well, we usually put someone like you into such and such an investment,"� or "We use this trust and this will protect you from such and such,"� you'll know they are not very process oriented. That kind of conversation should come later, as the result of a process—it's not the goal.

MTM: What is the goal?

Bradley: To move successfully through the life transition process that has been triggered by a "sudden money event"�— so that you come out the other side with a sense of renewal, rather than regret.

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Susan Bradley is the founder of the Sudden Money® Institute ( www.suddenmoney.com ), a network of financial professionals who advise people experiencing changes in their financial status. She is also a nationally-recognized writer, speaker, and financial planner. A columnist for the Journal of Financial Planning and the financial editor for Vive magazine, Ms. Bradley has been featured by Good Morning America, NBC Nightly News, The Today Show, USA Today, Kiplinger's Personal Finance magazine , Money magazine , The Wall Street Journal, The New York Times, The Financial Times, and The Robb Report.

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