Newly rich beware
Get a new number, adviser and go away

By BRUCE ERSKINE / Business Reporter

It may not sound like financial advice, but the first thing anyone who suddenly comes into a lot of money should do is get an unlisted phone number, says an investment adviser with Beacon Securities in Halifax.

"That's a tremendous pressure on a person," Chris Pilichos said in an interview Wednesday. "You're just going to be inundated."

Ferne Hawley, 44, of New Waterford is recovering from a heart attack believed to have been brought on by the number of requests for money she's received since winning $10 million in the May 22 Lotto 6-49 draw.

Ms. Hawley, who lost her job at a local Home Hardware store a week before her win, said she had people lining up at her door looking for money.

The pressure became so intense that she and her family went into hiding in London, Ont., where she said she suffered a heart attack that doctors attributed to stress.

Ms. Hawley has since returned to New Waterford, where she said she's wary about answering the phone.

Mr. Pilichos, a two-time winner of The Chronicle Herald's stock picking contest, said his immediate financial advice to a windfall winner would be to put the money into something very secure, like a federal treasury bill account.

"Don't just put it in the bank where you'll get zippo."

The next step for someone not used to dealing with large amounts of money would be to contact an experienced investment adviser, he said.

"Investigate very carefully," he said. "You want someone reputable."

An investment adviser will help determine what kind of risk tolerance a newly wealthy, but inexperienced, investor has, he said.

"You develop a portfolio - how much you want in stocks, bonds, cash - from an understanding of an investor's (risk) tolerance."

Apart from changing your phone number, Mr. Pilichos suggested that it would be a good idea, after socking your pile into a T-bill account, to get away for a few months to get used to the idea of having a lot of money and to think about what to do with it.

"You don't want to talk to anyone right away," he said, noting that some people have just frittered away their winnings and have little or nothing to show for it within a few years.

Paul Wilson, a certified financial planner with Freedom 55 Financial, a division of London Life, agreed that windfall winners like Ms. Hawley need a cooling-off period before making any long-term decisions.

"Packing up and going to Hawaii may not be the answer, but it's not a bad idea," he said. "You can't live in the neighbourhood."

Mr. Wilson said receiving an unexpected large sum of money, either through a lottery win, an inheritance or an insurance settlement, puts people on an emotional roller-coaster that isn't conducive to sound financial decision-making.

"Don't make any long-term decisions until you've got your wits about you."

Ms. Hawley and her partner, Tom Young, have five children in the family. Before her win, she said, she worried about paying the bills.

"I thought (the money) was a blessing," she said. "But when you land in the hospital, you realize quickly what money doesn't buy."

When she picked up her $10-million cheque in Moncton, Ms. Hawley said she planned to have fun with the money, but Mr. Young acknowledged that the couple didn't "have a clue how to handle $10 million."