As professionals in wealth management, family law and estate planning, we owe more to our clients than simply coming up with the financial and technical solutions to their problem.
It’s a reality that every person will experience at least one major life changing event in their lifetime. It could be as common as retirement, or as devastating as a divorce or the loss of a spouse. In any case, when life changes, so does money.
The opposite is also true: when money changes, so does life. A large inheritance can change the whole ballgame for an individual or family, bringing on a set of circumstances where the decisions that are demanded are way beyond the scope of their experience or capability. What each of these life events has in common is that each has a major financial component, and each signifies the end of one chapter in one’s life and the unexpected beginning of another.
These are each an example of a life transition. As such an event looms or unfolds, there is certainly no lack of awareness that one’s life will be more than just changed; it will be transformed and will likely never again be the same.
We refer to this experience as a transition, as differentiated from change, because it can involve a long period of physiological and neurological trauma and, without our awareness, influence our client’s perception and decision making process.
Transition (as opposed to change) involves an important period of passage from the time of the triggering event to the eventual emergence to a new normal – highly different from one’s previous life, but potentially fulfilling in its own right.
We often refer to the butterfly as a metaphor for this metamorphosis – the caterpillar inevitably forms its chrysalis and emerges as a butterfly, having undergone a major life transition. However, people experiencing a major life transitional event often struggle considerably before their next life phase can emerge. They need a trained professional to understand the significance of this experience and to knowledgeably guide them.
A Certified Financial Transitionist™ (CFT™) has the knowledge and training to recognize that clients in the midst of such a deep psychological and emotional struggle need more than financial and technical solutions. Clients are best served by their professional advisor in building a collaborative team with a CFT™ and other professionals who will address the personal as well as the financial and technical ramifications of the life event. As CFT™s, Silver Oak’s advisors are trained to understand the significance of the client’s experience and can serve as an important member of this team to knowledgeably guide both the emotional and financial aspects of this transition.
We believe that transition expertise matters, and that every professional who interacts with clients as a result of a life transition needs to be aware of this.
Here are brief synopses of the FIVE most important lessons learned from the study and work done with individuals who are experiencing a major life event:
- The moment someone learns that they are about to experience a life event is the moment that person’s transition is triggered. Life starts feeling complicated and challenging as the reality of the impact of an impending event sinks in. Clear thinking, making good decisions, functioning well in relationships and handling oneself well in social settings – all suffer from the cognitive impairment that the shock of a major life transition event triggers.
- If you are an Estate Planning Attorney, a Family Law Attorney, or a professional trusted advisor to someone anticipating or in the midst of such an event, it’s time to get out of the driver’s seat. This is not the time for solutions. If you are going to best serve clients in transition, you will need processes, tools and training for the personal as well as the technical side of your client’s situation. Transitions take years not months, aren’t always linear, and certainly aren’t following the timetable of the professional advisor.
- The nuance and the art of Transition Literacy is in knowing that not all decisions that present themselves need to be acted upon at that moment. Helping the person as a “thinking partner” to know what to do and when to do it is where a professional advisor can help reduce stress and better position the client to make the smart decision or action at the right time.
- Do not underestimate the degree to which transitions can cause debilitating stress. Whereas stress can increase focus, drive and performance (both psychologically and physically) for finite periods of time, it requires rest immediately thereafter to contribute optimally. Transitions, conversely, are not finite in length and recuperation is not an option when in the midst of one. Chronic stress can result, and can cause degrees of physical, psychological and emotional harm. Worse, the individual is often unaware of their own diminished capacities.
- Even when people aren’t stressed, they need help making decisions. Research from the 1990’s on has shown that human beings are irrational. We don’t always make decisions that are in our best interest. In facing a new and foreign “landscape” as a result of a major life event, we are further susceptible to making decisions that could have lifelong negative consequences.
As we noted in the beginning of this article, money is always the obvious driving factor in the change which brought the client to us for professional help. Beneath the money, however, “the elephant in the room” is the stress and anxiety induced by the unfolding of the event, and how the client is trying to adapt to new circumstances and deal with it. Simply ignoring this is missing an opportunity to serve the client at the highest level possible.
Note: This material is condensed from an article written by the founder of the Sudden Money Institute, Susan Bradley, CFP®, CFT™(www.suddenmoney.com)
Eric D. Bruck, CFP®, has provided comprehensive wealth guidance since 1981. Eric’s clients lead successful but often complex financial lives, and appreciate that the true value of well-managed wealth lies in the quality of life it supports.