President and Founder Mitlin Financial, Inc.
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How to Help a Client Manage a Windfall

Mar 6th 2019
Manage a windfall
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We are currently in the midst of one of the greatest generational shifts in wealth. Baby Boomers are in the process of transferring an estimated $30 trillion in assets to the next generation, according to Accenture

Although that number is huge, the reality is the majority of intergenerational wealth transfers will fail by the time they reach the second generation. Work will need to be done by the current one to raise their level of success in maintaining the family money.

So, why do you need to think about this? Well, many of your current clients will be on the receiving end of this transfer, and managing a windfall can be a blessing and a curse. On the one hand, they have received significant assets that will help them and their family, but on the other, they now need to devote time and effort to managing it. 

In addition, your clients could also be the recipient of a windfall through a business that takes off or even winning the lottery (which I would not count on as a viable strategy).

No matter how they receive their wealth, they and you should take the following steps.

The first item on your client’s to-do list should be hiring an advisor who can assemble a team and walk them through the steps and the process to manage this windfall. The type of money we are discussing in the framework of this article requires a number of key people, including tax, legal, risk management and investment professionals, just to name a few. 

It is important that one of the advisors, hopefully you, will take the lead, organize the team and keep everyone on the same page as you assist them in managing their newfound wealth. The last thing you want to do is watch your client collect and then lose the money.

Once the advisory team is in place, with you at the helm, it is important to work with the other members of the team and devise a plan. Your client will not want to rush this part of the process, since making a few wrong moves or deviating from the plan could result in the loss of their wealth.  The plan will be a roadmap to ensure they are receiving, spending, protecting and handling their money in the best way possible. 

Building this plan and sticking with it over time will give your client the best possible outcome for assuring these monies stay with their family for generations to come. In addition, it will help you maintain them as a client. 

This windfall, in most cases, is more money than your client has ever had to manage, and it’s their tremendous responsibility to make sure it lasts. Working with an advisor and the proper team will certainly add to their success. 

Remember: Life is not static, and it is critical to revisit the plan with your client on an annual basis. Each area of their financial life should be reviewed and discussed with the primary advisor. Adjustments may be needed along the way, which is normal. 

In addition to having the right advisory team, it is also important to help your client educate the next generation along the way to solidify their success and your relationship with the family.  Ideally, you want the next generation to have a full understanding of the family wealth and values, which can be achieved by bringing them into the inner circle rather than sheltering them. The next generation needs to see, understand, become acquainted with and learn how to work with the family advisors in order to raise the level of success for those who come after them.

The success of handling a windfall and having it last for many generations lies in the family’s ability to align themselves with the proper advisors and team while educating the next generation on what this money means and how it will be best kept and used to help future family members meet their financial goals. You, as the accounting professional, can lead this team and guide your clients through the right steps, thus ensuring their continued wealth and the success of your firm.

This article represents the opinion of Mitlin Financial Inc. It should not be construed as providing investment, legal and/or tax advice.

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