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WINDFALL


Manna in the form of big money falls from heaven or somewhere thereabouts; it is in the nature


of such benedictions that the brain oſten short-circuits. How do you control this and do the right thing? Read on


by Yan Barcelo illustration by Michelle Thompson


WO MILLION DOLLARS unexpectedly lands in your lap, maybe because you picked that lucky lottery ticket, or because you stumbled upon a treasure chest on a deserted Caribbean island, or because you sold your house in Vancouver for 20 times its


original purchase price. How do you manage that money? John Drein and his wife, Drew (fictitious names), a couple


in their early 50s, sold their Vancouver home for the seismic sum of $1.5 million. They bought an expensive sports car and put money in very risky investments that promised very high returns. In less than a year, they found themselves with less than half of the original amount. Mark Therriault, a financial adviser with Nicola Wealth Management in Vancouver, says that this happened despite the fact that “we had built a finan- cial plan for them that would give them an early retirement and a steady income stream.” This is not an exceptional story. Most of the financial ad-


visers CPA Magazine spoke with for this story had a number of anecdotes about people who “lost it” under a sudden


shower of money. A Quebec couple burned through the $1 million they won in a lottery thanks to the purchase of a luxury home, a Harley-Davidson, South Seas vacations and countless giſts to their children and family. Years later, health problems and mismanagement landed them on so- cial welfare. “Happiness was much more present before we got the million,” the woman told Le Journal de Québec. According to research by the National Endowment for


Financial Education, 70% of people who suddenly hit the jackpot — any jackpot — end up broke within seven years.


Psychology first That’s why the key advice on how to manage a windfall is not financial, but psychological. First: don’t talk or brag about it; keep it to yourself. Nobody needs to know that you’ve just sold your house for an insane amount or that you have inher- ited money from an uncle you had never heard from. “Don’t tell your family and friends until you have things in place,” says Angela Mercier, a financial adviser in Dartmouth, NS.


44 | CPA MAGAZINE | JANUARY 2018


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