Do You Feel Stuck?

The following article includes a hypothetical story about the confusion and anxiety a couple experiences as they consider the possibilities of selling their 20-year-old real estate brokerage firm.

Ben Bradley opened the doors of his real estate brokerage firm twenty years ago with dreams of retiring young and living the good life. But in the process of building the business into a successful marquee name in the housing market, the years became a blur of long days, short weekends and too much time away from his wife, Kate, and their two sons, whom he adored. Kate, a former teacher, was just as busy raising the boys, managing all the household affairs and volunteering almost full-time at the school. They both enjoyed their work, but felt their lives were speeding by and they were missing the best parts.

That’s when the bid materialized: a serious offer to purchase Ben’s firm at a price exponentially higher than he’d ever expected. The Bradleys had already amassed a considerable amount of wealth, but selling the business would give them the time and freedom they’d been craving. They could move to Florida; get the boys out of the city, live life at a slower pace, play golf five days a week, if they wanted to. Their excitement rose as they considered the possibilities. And then they started to worry.

Dazed and confused

Surprisingly, Ben and Kate found themselves paralyzed by uncertainty and anxiety. They couldn’t imagine passing up such a spectacular offer, but their business represented 20 years of creativity, dedication and sacrifice; could they just walk away from it? What would they do with themselves? They were still young and felt a strong drive to be productive. Wouldn’t the Florida dream—so alluring when they were working 14-hour days—be kind of boring? And they’d heard horror stories of how wealth had turned kids into lazy slackers. Could that happen to their boys?

Even the money itself was a concern. They had invested their wealth wisely so far with the help of their advisors, but the kind of money this sale represented would catapult them into a new league. How were they supposed to deal with that? Their windfall started to feel like a burden before they’d even had time to celebrate.

The Bradleys were quick to recognize that wealth creates opportunity and complexity in equal measure. And no matter how successful and intelligent they are, few people navigate its intricacies with ease and confidence. Most will wrestle with some or all of the following kinds of challenges:

Confusion: The logistics of managing this kind of change are overwhelming. I need to learn more and figure out what should happen, but I’m so busy now that I don’t have time to deal with it.

Guilt: I can’t imagine selling the business I’ve worked so hard to build. What about the employees left behind? What about our notion that we’d keep the business in the family? And what would I do with myself all day?

Lack of knowledge: I feel like there’s too much I don’t know about taxes, risk, investing and planning. I don’t know how to figure out how much money we need for normal living, let alone all the other things we’d like to do. I’m not even sure of what questions to ask.

Control and trust: I built this business myself and I’m used to being in charge and making decisions. We have some advisors now, but I’m uncomfortable with the idea of putting even more of our wealth in other people’s hands. I don’t want to lose control.

Too many choices: We’ve worked so hard for so long that we’ve never had time to think about what we’d do if we had time and resources to spare. Now that we do, all the options are overwhelming. How do we decide?

Expertise: Even if we felt comfortable having others manage our wealth, do we have the right people in place? This might be more than current advisors can handle. Who else do we need to get?

Family: We want to make sure our wealth is a positive force in our family. How do we make sure our kids are grounded enough to handle the responsibilities and opportunities? And how can we share our good fortune with other family members without creating problems?

The Bradleys’ deer-in-the-headlights reaction is fairly common, in fact. For example, a study¹ by PNC Advisors based on interviews with 792 affluent investors found that 37 percent of investors with more than $10 million in assets don’t even have a will. Of these, 56 percent cited procrastination as the main reason. A stunning 58 percent of the survey’s respondents said they have never discussed the issue of wealth transfer with their families.

Jay M. Brown, an SEI Wealth Network program manager, isn’t surprised by the statistics. “These are difficult discussions,” he says, “Not just because they’re time-consuming, but because people are so focused on what’s going on today that they forget to think about what they want down the road for themselves and their families. They’ve been busy building their businesses, raising their kids—just keeping up.” Unless they attack these issues head-on their anxiety and confusion will only grow.

How much is enough?

One of the more common fears is whether there is enough money, a concern that surfaces regardless of how much a person actually has. “There’s a huge psychological hurdle,” says Brown, “People who have worked their entire lives to build their wealth may feel uncomfortable when it comes time to spend it.” That’s especially true if, like the Bradleys, they are considering the prospect of living for the next 40 years or more on that single bucket of money without a steady income to replenish it.

They try to assuage their fears by coming up with a number that will make them feel comfortable. “People almost always look for some standard formula that will assure them they have enough,’” says Susan R. West, an SEI Wealth Network financial strategist, “But enough for what? That’s the real question.”

Enough for what?

“That question is deceiving in its simplicity,” says Brown, “We take clients through a process we call articulation to help them discover what
they really want and need in their lives. In the course of that process we often unearth conflicting goals, unforeseen consequences, and a host of other potential obstacles.”

It helps to have a decision framework around which people can organize their thoughts. SEI uses a straightforward process which resonates with clients and assists them through life’s decisions points.

Self: Everyone has dreams for themselves, ranging from pastimes like travel to complete career changes that may require an advanced degree in a new field or refreshing some long-shelved knowledge.

Family: Most people who have worked hard to build their careers, businesses and wealth have missed a fair number of school plays or worked through too many vacations. They want to build deeper relationships with children, reconnect with their spouse, support family members’ entrepreneurial leanings or mentor a grandchild’s budding interests.

Community: Once people have their own lives and their family’s interests well in hand, they turn their attention— and their considerable means and skills—to their communities. Whether that means figuring out how to make a difference in the lives of inner-city students or accelerating a particular type of medical research through generous funding, these are highly personal endeavors that reflect individual passions.

Priorities

Even with a helpful decisions framework like Self, Family and Community, it’s still hard to see what’s possible, weigh the choices, get priorities straight and reach agreement with family members.

“We had to come up with something creative that would shake people up a bit—encourage them to use their imaginations and really talk about what they want,” says Brown, “We call it the Discovery Board.”

Clients are given cards that variety of life choices printed on them, like “teach children the importance of giving” and “set someone up with
a business.” The idea is to place each card on the board in one of four quadrants: want to do now, want to do later, have to do now and have to do later. When we work with couples (our normal and preferred approach) we require that they agree on where to place each card. That can provoke some lively discussion, which is what most of them have been putting off. “I thought it was kind of hokey the first time I saw it,” Victor Ngai, one of SEI Wealth Network’s legacy strategists, admits, “and many of my clients react that way initially, especially the men.

"When you visit a financial advisor you expect a guy with a legal pad to ask you a bunch of serious questions. But, honestly, this approach never fails to get people talking, and we learn much more than we do when we just ask the predictable questions. Our clients tell us they’d never even thought about some of the issues that come up,” says Ngai, “And more often than not they’re still talking about them long after they leave our offices. That’s a good thing.”

Still, the conversations can be difficult and are most productive when they’re facilitated by someone the participants trust; someone who knows the right questions to ask and can keep the discussion focused and positive. That person has to remain objective, but still get close enough to give people the tools, information and guidance they need. It’s a difficult role that extends far beyond the usual notion of facilitation. SEI’s client experts (called personal business managers or PBMs) get the conversations started and question clients deeply until they have developed a clear vision of what they want and where those things fall on their list of priorities. They must be able to listen carefully, observe subtle behavior and know when to intervene, when to offer expert advice, and when to step back.

Ben and Kate are a case in point. When they finally sat down to discuss their goals, Ben talked enthusiastically about his dream to start an art gallery with his sister. It was clear, however, that while he’d mentioned this to Kate long ago, she hadn’t realized how serious he was about it. Ben was equally surprised to hear that Kate wanted to go back for her PhD once the boys were in high school. “It’s rare that these omissions are deliberate,” muses Brown, “More often, they’re the natural consequence of too little time and too many things competing for attention in our day-today lives.” Nevertheless, the resulting confusion can be upsetting, and the Bradleys’ PBM had to help them get past the miscommunication and back on track.

The conversational nature of the articulation process is much more easygoing and less intrusive than the normal question-and-answer sessions. Though a PBM guides the conversation to make sure she’s getting useful information, participants have control and generally gravitate toward the issues that are most important to them. In the course of their natural interaction, the PBM see clients’ potential problems and patterns of behavior—data that will inform her efforts to help them.

At the end of the articulation process, all the decisions about goals and priorities are captured on paper. It’s a tangible symbol that they’ve gotten everything out in the open, agreed on their choices and are, in the case of couples, jointly accountable for their future. That simple document triggers an enormous sense of relief that quiets the nagging worries.

Taking stock

Identifying life goals and priorities is usually the biggest hurdle for most people, but those steps create the context for evaluating choices and
making decisions as they work toward those goals. Once they’ve cleared that hurdle, they’re relieved, confident and a lot more optimistic.
It’s still necessary, however, to nail down the specifics of their current financial situation—taking inventory of their resources, including assets, ownership and anticipated cash flows. It’s an enlightening exercise and the first step toward aligning a couple’s wealth with their life goals.

“Seeing the truth in black-and white is eye-opening,” says West, “It can dramatically alter a couple’s understanding of whether they truly
have enough for what they want to do.” More often than not, the resulting news is great and there’s quite a lot left over after covering current lifestyle expenses. It’s a pleasant surprise to find oneself in the enviable position of being able to act on life goals—to stop imagining and start doing.

Change is inevitable

Things change. Careers take unexpected turns, new opportunities present themselves, and children surprise you with new challenges. Even the most lovingly and carefully crafted goals and strategies are unlikely to remain static forever. “You have to build plans that are flexible enough to accommodate the unknown and you have to reevaluate them often,” says Jeffery P. Ladouceur, another SEI strategist, “So today’s answer to the ‘how much is enough?’ question might not hold for the next two years, let alone the next two decades. You have to keep re-examining all the variables that led you to that answer.”

The good news is that once a person has gone through these processes— imagining the possibilities, setting goals and priorities and taking stock of the current situation—it’s easier the next time around.

Bradleys revisited

The Bradleys took the offer. But after starting with articulation and processing through the client process, they realized they didn’t really want to live in Florida and play golf. They decided that Kate would go back to school and Ben would pursue a gallery partnership with his sister. They still longed to escape the city, though, and their new plans included purchasing some land in the nearby countryside. They also decided to start a mentoring program at the local university to guide would-be real estate entrepreneurs through the business planning stage.

Still wondering what we mean by “stuck”?

If you see yourself in any of the following statements, you may be somewhere between an idea and action in the development of a plan that aligns your wealth with your life.

Self

• I am too busy making money to worry about what to do with the money I’ve made.
• I just don’t have the time to think about what’s next.
• I start to think about what is “next” for me and then I put it aside—for lots of reasons.
• I feel like I am “sitting” on my wealth.
• I have a sense that I could be doing “more” but I cannot quantify it.
• Regardless of my significant net worth, I don’t really consider myself wealthy.
• I am starting to feel like my wealth owns me rather than the other way around.

Family

• I have a will but I am not really sure if my family is protected—today or into the future.
• I have a mountain of estate planning documents but I don’t really know if they accomplish my intent.
• I have concerns about my wealth’s impact on my family but I have not shared those concerns.
• My significant other has concerns as well—but I don’t know if they are the same.
• It has been a while since we talked about “what ifs” for our family— the good and the bad.
• I don’t want my wealth to spoil my children —but I don’t know how to definitively prevent that.
• I do want to use my wealth to positively motivate my children— but I’m not sure how to make this happen.
• I want to use my wealth to help my extended family—but I don’t know how to do this in a fair, equitable and affordable way.

Community

• We give back but I am never sure if it is having the impact we want...
• I don’t know how much I can afford to do—so I hold back from some things that I want to do.
• We would accelerate our giving programs if we knew how to coordinate it with our plans for ourselves and our family.

Talk with a member of the SEI Wealth Network today.

¹ Survey to identify attitudes about wealth among high net worth individuals, how it affects their lives and their needs in managing wealth; conducted in November 2004 by HNW, Inc. on behalf of PNC Advisors.

The SEI Wealth Network is an “umbrella” name for various life and wealth advisory services provided by your personal business manager and SEI Investments Management Corp. (SIMC). Components of these services and programs may be offered by SEI subsidiaries and non-affiliated third parties. SIMC is a wholly owned subsidiary of SEI Investments Company.

The story represents a hypothetical based on a composition of multiple client experiences and issues and SEI’s proposed solutions. This is intended to illustrate the different services provided by SEI Investments Management Corp. and is not meant to guarantee that a client’s needs or objectives will be met.