Today is July 27, 2008  

Our Services

We have a special expertise serving “sudden money” recipients—individuals that quickly receive a large sum of money through divorce, inheritance, or lawsuit.  We best serve those that find themselves outside their financial comfort zone.  We help our sudden money clients go from confused and overwhelmed to confident and in control through a five-step process. 

Sudden money recipients come from all walks of life, backgrounds, beliefs, and corners of the world, but they all share one common thread.  This common thread is that they have received newfound wealth from a divorce, inheritance, or lawsuit and it has pushed them outside of their financial comfort zone. 

Our goal is to become a trusted partner.  Because we don’t sell any products and are not compensated based on the advice we provide, sudden money recipients have someone in their corner that is looking out for what’s best for them.  We act as financial bodyguards—making sure nobody is taking advantage of the situation. 

In addition to the 360 Wealth Management™ process we take all of our clients through, we have developed a five-step process specifically for our sudden money clients discussed below. 

What is Sudden Money?

There’s gradual money and there’s sudden money.  Most of us are used to gradual money—earning an income and building a nest egg over time.  It’s a slow and steady process.  As our net worth increases over the years, we adapt and slowly become more financially sophisticated.  We may first hire a CPA to do our taxes when the deductions get too complex, then hire an investment advisor to manage our growing wealth, and then hire an attorney to help us create an estate plan.  It’s like riding a smooth elevator—you’re going up, but you hardly feel it. 

Then there’s sudden money.  It’s like being on the ground floor of a 60-story building and rocketing to the penthouse suite in seconds.  It sounds a lot more exciting than gradual money, but what exactly is it? 

Sudden money means getting more money than you’re used to being responsible for—and getting it all at once.  There’s no minimum dollar amount to qualify as sudden money.  The distinguishing factor is that the amount has to be large enough to take you out of your financial comfort zone. 

If you’re struggling to get by and suddenly get a check for $10,000, this might push you outside of your financial comfort zone.  On the other hand, if you’re a multi-millionaire and inherit $100,000, you might not miss a beat.  Again, the amount isn’t important; it’s your reaction to the amount that determines if it is sudden money. 

Where does sudden money come from?  It may have resulted from luck or hard work.  It may have been years in the making or it may have happened in an instant.  It may have been the result of a long and bitter battle or simply being at the right place at the right time.  It may have come from a painful end or a happy beginning.  Typically, sudden money comes from a lawsuit, divorce, sale of a business, inheritance, lottery winnings, sport/entertainment contracts, retirement packages, or stock options. 

Regardless of where the money comes from, you’re the same person you were the day before you received it, but you are quickly thrust into a new and often uncomfortable situation.  While sudden money sounds like a great thing, it can cause anxiety, indecision, and fear in those who don’t adapt or develop a strategy. 

Have you heard of the woman from New Jersey who won two lotteries totaling $5.4 million?  She spent it all and now lives in a trailer.  What about the entrepreneur who earned $24 million overnight from a successful IPO?  Within a few months, he lost it all.  What about the man who won $16.2 million?  Less than a year later, he was $1 million in debt and now lives on Social Security. 

Unfortunately, there are many more stories just like this.  In fact, according to an MSN article, “as many as 70% of those who come into sudden money end up losing it all because of their inability to deal with the practical, financial and emotional issues involved.” 

Sudden money clients have special and unique needs.  In addition to the 360 Wealth Management™ process we go through with all clients, we have also developed the following five-step process specifically for sudden money clients:

Step 1 – Build your financial team
Step 2 – Calculate your “end of day” number
Step 3 – Create your wish list
Step 4 – Determine what is possible
Step 5 – Monitor, monitor, monitor

While you may be in unchartered waters, we’ll help you create a financial team composed of people who live and breathe in these waters.  This team can help you navigate the numerous tax, financial, and legal issues that arise.  This is the first step because there may be time-sensitive opportunities to deal with immediately that can help you save or defer taxes.

Who should be on your team? 
In addition to us, you’ll want a CPA and an estate attorney.  You should also consider a money psychologist, and if your sudden money is highly publicized, a publicist to handle the media on your behalf or to give you the tools to communicate effectively with the media yourself.  Note: If your sudden money is the result of a lawsuit judgment/settlement, talk to your attorney before you talk to the media or hire a publicist.  He/She may have other pending cases that could be affected by what you say.   

Your financial team needs to have only your interests in mind.  Sudden money can cause feelings of fear and paranoia.  The last thing you need is to wonder if the advice you’re receiving is in your best interest or in the best interests of your advisors.  Only hire a CPA and an attorney who charge by the hour.  At Pacifica Wealth Advisors, we don’t sell our own products, charge commissions, or receive referral fees.  Bottom line, our compensation isn’t tied to the advice we give you and neither should the compensation of your other advisors.

Not all sudden money is created equally.  A check for $20 million may actually be worth less than a check for $10 million.  How?  Taxes.  If you receive an inheritance, you won’t have to pay any tax on it.  If you win a judgment, part of it might be tax-free, but chances are that you’ll have to pay tax on the rest. 

When it comes to taxes, the last thing you want is a surprise.  Each sudden money event has different tax ramifications.  It’s important to know how much tax you’re going to have to pay so you can plan for it.  We will help you find out exactly how much tax you owe.  Once we know this amount, we’ll help you develop a strategy to protect it while still earning interest on it. 

Also, what are your other liabilities?  Do you have a large mortgage?  Unpaid credit card debt?  Other outstanding loans?  How much are all of your liabilities combined? 

End of the Day Number
(Sudden Money + Previous Savings) – (Taxes Due + Total Debt)

Your end of day number tells you how much you have to spend, invest, and live on.  It’s a critical number that we will help you calculate.  

Newfound wealth can open the door to opportunities that may have never been an option before.  We will help you consider all of the possibilities and help you design the life of your dreams.  This is a thoroughly enjoyable process where we focus on your Life Zones—those areas in your life that are most important to you such as financial health, family, personal growth, physical health, relationships, spirituality, etc. and answer three questions:

1. What do you want to own.
2. What do you want to accomplish.
3. Who do you want to be.

We view money as a tool that—when used properly—can help you obtain the life you desire.

Before you buy that house or car and before you quit your job, you need to determine how far your sudden money will allow you to go.  We calculate if you can live the “wish list” life you created without getting into financial trouble down the road.

This is one of the most important steps because you’ll know what you can do and what you can’t.  You won’t wake up in a cold sweat wondering if you can afford the trip to Hawaii—you’ll know.  If you don’t take the time to complete this step, you can jeopardize your new wealth.  If the people discussed earlier who received the sudden money had taken the time to complete just this step, they wouldn’t be broke or in debt today.

Once we help you determine what you can afford, we can go the extra step and develop checks and balances.  For example, we can develop a system where you can run all purchases by us if they exceed more than a set dollar amount.  Or that you’ll give yourself a “cooling off” period—say 48 hours—before you make an impulse purchase over a certain dollar limit.  You’re not asking us permission—it’s your money.  You are simply doing what you can to make sure you are making wise decisions with your money and not letting your emotions take control.

In real estate, it’s location, location, location.  With sudden money, it’s monitor, monitor, monitor.  The financial plan we created for you yesterday is already out of date.  That’s okay and it’s to be expected.  This doesn’t mean you need to constantly make changes, but it does mean we will need to be kept apprised of what’s happening and make adjustments if you’re getting off track. 

In the beginning of our relationship, we will meet and speak on the phone often.  We will also meet at least once a quarter to discuss the following reports:

1. Net worth.  This answers the question—how much am I worth after paying all of my debts?  It’s an important number that needs to be reviewed often.  Excessive spending and/or poor investment returns can eat away at your assets and decrease your net worth over time.
   
2. Cash flow.  This report shows a running tally of your income and expenses.  You will be able to see exactly what was earned and what was spent over a period of time (e.g., a quarter).  You’ll want to be aware of two situations.  First, are you earning less than you projected?  Second, are you spending more than you projected?  Occasionally earning less or spending more than you thought shouldn’t be an issue, but if it becomes a regular occurrence, you’ll need to make a change.
   
3. Investment summary.  We will review \how your investments performed over the last quarter and give you an economic/financial update.  Again, a quarter of underperformance shouldn’t be a problem but several quarters might be. 

These three reports we develop will help us keep our finger on your financial pulse.