Christmas has come early for a rash of lottery winners in Alberta in recent months. One lucky Calgarian won $70 million on the October 21st Lotto Max draw. Two Edmontonians won $1 million each in separate draws in September. Three separate winners netted six figures each in August (from Sexsmith, Chestermere, and Lethbridge). And yet another big ($17 million) win went to an Edmonton resident on July 30th.
To these fortunate folks, and to anyone else who might unexpectedly come into some sizeable funds, WealthCo’s Vice President of Insurance & Estate Planning, Jeff Dyck, has some words of advice.
“Take a deep breath. Let it sink in. Regardless of whether the winnings are a few hundred thousand dollars or $70 million, your life is going to change. Take some time to be mindful and think about the future.”
Easy Come, Easy Go
Winning the lottery, or getting a big unexpected windfall of cash, is what dreams are made of for many. That’s why it is so tragic when you consider that 70% of lottery winners will lose or spend all their winnings within five years.
“We’ve seen this time and time again, professional athletes and celebrities that end up bankrupt and broke,” Dyck points out. “Regardless of the sum of money it is truly amazing how quickly it can disappear.”
How to Avoid Becoming a Lottery Statistic
After that deep breath and sinking in period, Dyck advises that it’s then time to get to giving serious thought to what you actually want to accomplish with this newfound wealth.
“Wealth can create so much opportunity, but it can also create so much heartbreak if not managed properly. It’s so important to establish clear goals and have an action plan.”
It can be daunting to even know where to begin, particularly if someone has never previously engaged in any form of financial planning.
“It’s really important to team up with professionals who can help you make sense of this life-altering change,” Dyck cautions. “Whether that is a CPA, a financial planner, an investment advisor, a lawyer, or all of the above, they can help you to build a plan based on what you want to accomplish and when. You really don’t want to do anything until this plan is built.”
Building, and then sticking to, that plan is the key to success. Otherwise, things can easily go sideways.
Be Mindful…But It’s Okay to Treat Yourself
While planning is imperative…let’s be honest here. If you actually manage to win the lottery (say, beating the 1 in 33 million odds of hitting the jackpot in Canada) or come into an inheritance, that calls, for at the very least, a fancy celebratory dinner out.
“It’s found money, you deserve something. Just don’t go absolutely haywire and do something or acquire items that you are going to ultimately regret,” Dyck suggests. “If it’s within that initial period where you are developing that plan, splurge on something - a watch, a pen, a piece of jewellery - but hold off on any larger purchases – a vacation home, a sports car, a boat - until your plan is in place and everything is settled in.”
Your team of professionals is a tremendous asset here as well when it comes to ascertaining the impact of those bigger purchases. They can work with you to consider the long-term implications and provide a gut check as to what is realistic and what is not.
Be Like Jarome Iginla
Legend has it that when hockey fan favourite, Jarome Iginla, was in his early days in the NHL and had signed a few contracts, including a $500,000 signing bonus, he had his heart set on a $115,000 Porsche 911. But, rather than simply going out and buying one, or heck, buying two so he’d have a matching set, he consulted with his financial team. And his advisor walked him through all the numbers so he had a full picture of his vehicular decision. At which point he made the informed decision to proceed (in his second year of his first contract, mind you) – but not without careful foresight.
“Our judgement as human beings is naturally flawed,” Dyck shares. “So by relying solely on our own judgement, without a team of professional advisors, it can be very easy to make costly errors and acquire things you don’t necessarily need, or even really want. Don’t just think the money will be there forever, plan for it to be there forever. As the old saying goes, failing to plan is planning to fail.”
WealthCo’s Integrated Advisory Community consists of all the key professionals needed to grow and protect your wealth. You don’t need to be a lottery winner or come into some unexpected cash to begin planning for how to meet your long-term goals – everyone can benefit from a financial plan. Reach out to further discuss your financial future, and how our team of specialists can help to get you to where you want to be.
Jeff Dyck has over 25 years of experience in insurance and estate planning for high-net-worth individuals and families. Through his relationships with some of Canada’s leading tax and legal practitioners, Jeff delivers expert advice to his clients on how to best mitigate risk and take advantage of opportunities to increase their financial growth and security.
The Integrated Advisory community consists of a network of progressive CPA firms, along with best-in-class professional advisors, service, and product specialists, who work together to deliver an elevated and holistic client experience. One that optimizes both their personal and professional lives with an integrated financial strategy designed to help clients reach their goals.
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