For better or for worse … when life changes

  by Jesse Anderson

Think back on the seminal events in your life. How many would you say were fortunate? How many unfortunate?

Financial planners have a term for those changes. We call them transition events. Examples of transition events include: marriage, retirement, career change, divorce, loss of a spouse or parent, a windfall or settlement, bankruptcy, the sale of a business and inheritance.

Almost all of these events will have both a financial and an emotional component. Some, like marriage, retirement, a windfall or sale of a business are occasion for joy, excitement, optimism and hope. Other times, life’s twists and turns bring sadness, anxiety and fear. If we are honest with ourselves, even the “positive” events often create mixed emotions.

My advice … take time to deal with the emotional component before dealing with the financial. I was mentored for awhile by a psychologist who worked with traders at hedge funds. He told me, “Whatever unresolved issues you have in your life will play themselves out in your trading.”

At the time, I dismissed his statement as a bunch of psycho-babble. Probably because I had unresolved issues I couldn’t face at the time! Imagine that!

But years later, I was able to see that he was absolutely right. And it wasn’t just in my trading, it was how I handled every aspect of my money – from the investments I chose, the house I chose to live in, the car I drove, even the people I chose to hang out with.

When we face a transition event, there are always going to be a tangled mess of unresolved emotions immediately following. If you have experienced a loss of some sort, you will probably feel hurt, grieving, angry, confused or needy. Who knows. Emotions are a complex thing. If you have experienced a windfall, surprisingly, you often feel many of the same things!

Whatever the emotions are, you need to take care of those first, before making any major decisions about advisors, investments, gifts or purchases.

A few years back, one of my clients ran into an unfortunate situation, when she and her family started signing papers just days after her mother passed away unexpectedly. She wrote me to tell me the situation had been resolved and to share what she learned:

I just got good news this morning. [Very big bank] got [very big insurance company] to give us a new free look period on that variable annuity so my dad is going to get the money back plus a $2000 gain. The man who investigated our complaint found that the first papers my dad signed were only to surrender the annuities that came due at my mothers death. We thought that was the “investment” contract. The variable annuity contract wasn’t signed until three weeks later when the money arrived in the bridge account. I wasn’t there then and Daddy did not receive a copy of the contract. This was well after the agent knew that we wanted to disclaim the money. That discrepancy made the bank see our point and it acted quickly.

Thanks for your advice. I hope my problem helps others see that most things can wait awhile after someone dies. You don’t have to act right away and probably shouldn’t. AND you should get a copy of every piece of paper you sign! I had thought I was smarter than signing papers without asking specific questions but you don’t know how you will act when you are shell-shocked and grieving.

Also, and this is going to sound cynical, beware of anyone who suddenly “appears” in your life after a transition event, especially one that involves a lot of money. Bankers, lawyers, brokers, insurance agents, long lost friends and relatives who suddenly appear can only have one thing in mind – to get something from you.

Same thing with new relationships. We often try to fill holes in our life, especially freshly created holes, by stuffing something or someone in them. Give yourself the gift of time.

A good rule of thumb is six months. Try not to make any decisions about anything, for at least that long, if you can possibly help it.

If that means money sits in a bank account or a money market fund for awhile, so be it. If that means you stick close to old friends and loved ones for awhile, that is probably a wise move. Decisions made within that six month window have a high likelihood they’ll be bad ones. Only after you take care of you, will you be in a place where you can take care of the money.

When it does come time to take care of the money, the next step is to do so from a place of confidence and power, not weakness and fear. I have always believed that knowledge and support are the keys to financial empowerment.

In my experience, and please excuse the genderalization here but it’s true, women are much less likely to stake out a position of financial empowerment than men. According to a recent LIMRA study, 60% of women are unsure of where to get help or the costs involved.1

Man or woman, a little knowledge can go a long way. When I first decided I was going to get smart about my own money, I turned to books. Some books are very helpful. Others are just a thinly disguised sales pitch or a regurgitation of tired, old ideas that no longer apply.

My Best of Kim’s Recommended Reading List contains a list of those I have found to be most helpful, in the areas of Investing Basics, Retirement Planning, IRA to Roth Conversion, Investing for Retirement, Funding Healthcare, and Estate Planning. It also contains a list foundational books I think all of us should have been made to read in high school right along with Catcher in the Rye and Catch 22.

When it comes to help with financial decisions, seek out someone who is more than a salesperson. And don’t turn to a friend, colleague or relative just because they are older, more successful or seem to know what they are doing.

My own philosophy is to seek out people who have both been where I am and are getting the results I want. The clue I am looking for is passion. When I find someone who is both knowledgeable and deeply passionate about the thing I need help with, that is probably the person I am looking for.

Once I find those people, I try to learn as much from them as I can. I read their books, invite them to lunch, take their classes, hire them as coaches or consultants and whatever else I need to do to gain from their experience, knowledge and insight.

That is an approach that has served me very well throughout my life – not just in money, but in business and sports as well. Many of the people I have sought out over the years became mentors, trusted advisors and friends. Not once have I felt the money was wasted or mis-spent, where I followed these guidelines and sought out people with experience AND passion for my issue or problem.

When faced with a transition event, our KiM-B-A courses are the perfect place to start – for both women and men. Those in their mid – 40s and below will probably want to consider My First Financial Plan. In your mid-40s and up, you really need to start Step-by-Step Retirement Planning.

For women, and particularly those who have recently been through a transition event, we have created Pulling Yourself Up By the Bra Straps: Financial Empowerment for Women, by someone who has been there, done that – me!

Then, depending on where you are and what problem you are trying to solve, you may want to bundle one of these core financial planning courses with Introduction to Investments, Investing for Retirement or one of our other financially empowering KiM-B-A courses. The KiM-B-A is what they should have taught you about money but didn’t.

With 20/20 hindsight, transition events, even the bad ones, often turn out to be opportunities. When it comes to those big, seminal transition events in your life, you don’t have to go it alone. First, get the support you need to deal with the emotional aspects. Give yourself six months, if you can. When you are confident you have that under control, then and only then should you seek out the support you need to deal with the financial aspect.


1 Ackerman, Ruthie. 3 May 2010. “When Living Longer is a Risk For Women.” Financial Planning Magazine., n.d., Web. Accessed 23 June 2010.

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