Money and Me: Suddenly Wealthy - What Should You Do When a Fortune Lands in Your Hands?

SPEAKER_1 (0:01)

Best of Live Well with Michelle.

It's not just about money, it's about you. Money And Me, where wealth meets self-awareness. Only on Money FM, 89.3.

Michelle Martin (0:19)

What happens when a large amount of money becomes yours, but emotional readiness, confidence, the ability to manage it doesn't arrive at the same time. You're going to figure out what you should do in those first few weeks. Increasingly, wealth advisers we speak to say that the real challenge is not transferring assets, it's preparing people to become good stewards of them. So what's involved there? And before deciding how the money should be invested, is there a more fundamental question you might want to answer? What is all this wealth ultimately for? Stephen Davies, the CEO and founder of Javelin Wealth Management, he's been advising families in Singapore since... Is it 2003, Stephen?

Stephen Davies (0:57)

It is, a long time.

Michelle Martin (0:58)

Welcome to the show, great to see you again.

Stephen Davies (1:01)

And you.

Michelle Martin (1:02)

Can we let the listener get to know you a little bit? What crosses your desk every day, Stephen?

Stephen Davies (1:07)

So we work a lot with, as you say, families and individuals in helping them manage their money. Hopefully making sure that money is growing appropriately relative to their risk appetite. And just making sure that it helps to answer that question of what's the money for. So we spend a lot of time talking to people about exactly that question.

What's it for? What do you want to do with it? And how much do we need to make sure you have in order to achieve those objectives?

Michelle Martin (1:34)

So this is really a bread and butter what we're talking about today.

Stephen Davies (1:37)

Very much so.

Michelle Martin (1:38)

So whether the money comes from inheritance or divorce or death of a spouse or selling your business, your first advice is essentially do nothing in a hurry.

Stephen Davies (1:47)

Exactly. So the key thing is that typically those large wealth transfers come from one of three sources. So a disposal of a business, a divorce or unfortunately death.

Either way, it results in a big transfer of money, usually cash and other assets. And unless you have spent a lot of time planning for that eventuality, it's very difficult to know exactly what to do with it when it arrives at the time.

Michelle Martin (2:18)

All right. Now, those four circumstances are financially similar in one sense in that you are responsible for a substantial inflow of capital, but psychologically they're quite different. So how could the source of money change the advice that you give out to your clients?

Stephen Davies (2:38)

Yeah, good point. So if you're disposing of a business, you're a successful entrepreneur and you've hopefully sold that business for a good sum of money. So that brings with it a lot of psychological issues as well because you spent your time growing your baby and now you've sold it on to somebody else. There may be some residual responsibilities that you will have in stewarding that money for a period of time with the new owners, but ultimately, you're going to be leaving the scene. So what does that mean?

You've spent your entire career building up that business and now it belongs to somebody else.

So that's number one challenge. What are you going to do with your time? A lot of people do like to do things that they've been putting off for a long time, which is perfectly fair. Going on holiday, spending more time with the family, all of that sort of stuff. But at the same time, you've also got to think about what you're going to do with the money. And certainly when we've been working with entrepreneurs, often we get asked to get involved after a period of time in which finally they begin to realize that they need to have a structure and a plan. Up until that time, it's all been about spending. It's all been about collecting nice, bright, shiny objects, a bit like a magpie. So you're going, I'll have a little bit of that, I'll have a little bit of that, and some of that too. That looks great.

But how does it all fit together? And that's a key thing. Often when we get involved, it's after a period of time when a variety of different assets have all been collected. But there's no structure, there's no goal, there's no sense of how these are all supposed to help you achieve that core objective of answering the question of what's the money for.

Michelle Martin (4:14)

Wow, that is fascinating. Thanks for taking this into your world.