Back to basics

The Ritcey Report

May 4, 2017

This is part two of a four-part blog about the, sometimes devastating, consequences of overnight wealth.

In my first blog post investigating the consequences of The impact of sudden wealth, I focused on the psychology rather than the practicality of the issue. This time I want to be more down to earth: Get a plan.

Build a wealth management strategy

A wealth management strategy has many components: financial planning, tax minimization, investment management, insurance, education financing (if you have kids), philanthropic and charitable giving, estate and trust issues, and legacy creation.

Developing a wealth strategy takes time and effort, but the consequences it will have for your composure and overall state of mind are incalculable.

Thieves, charlatans and charities

If you attempt to become involved in making investment decisions before you acquire an appreciation of the risks and rewards involved, you are fair game for the thieves and charlatans who regularly prey upon moneyed novices.

Charity is often uncharitable. Rarely a day goes by that the media fails to interview someone who has come – often blundered – into money. Unfortunately, there is not enough money in the world to satisfy the myriad of organizations with outstretched hands.

Charitable institutions that are carefully selected and effectively monitored can be an excellent way to share your good fortune in a meaningful way, but simply pouring out dollars on impulse is no way to accomplish any lasting good – and will likely harm you.

Calvin and Ernie: voices from the past

Get suddenly rich and within a few days long lost cousin Calvin will phone to remind you how much he always admired you, and how his current misfortune can be resolved if you can just see your way clear to assisting him.

And don’t forget your former classmate Ernie. His email celebrates the friendship you two shared, adding that the technology IPO his brokerage firm is underwriting is certain to be right up your alley.

If you fail to fend off these hangers-on, you’ll find yourself in deep trouble.

A defensive shield

More than providing you with an organizational basis for administering your newfound riches, a wealth management strategy provides you with a defensive shield against those who would take advantage of you.

Ultimately it enables you to say: While I take your request seriously, I get quite a few of them as you might imagine. So I must run it by my advisor. Together, we will assess the merits of the issue, make an informed decision, and get back to you.

Without a wealth management strategy, supported by a reliable advisor, life for the recently rich can become quite unpleasant.

Dave Ritcey, The Ritcey Team, Scotia Wealth Management