Power Planning for the Powerball Winner

Luellen Lockwood, MBA, CPA, EA | August 25th, 2017


As Mavis Wanczyk, this week’s Powerball Winner of $758.7 million, said, winning the lottery was a “pipe dream I’ve always had.”  I think all of us can relate to this statement.   To have $336 million (after taxes) just drop in your lap is truly life-changing.  And to put this in a different context, Ms. Wanczyk’s new net worth is on par with that of Ellen DeGeneres (estimated $330 million) and Clint Eastwood (estimated $375 million).  So, she is now in a very elite group and certainly has a form of celebrity status.

Celebrity status brings a variety of good and not-so-good things.  Let’s get the negatives out of the way up front.  Ms. Wanczyk is now in a state of shock, as her life is forever changed.  She has left the comfort of her present life and has this huge unknown in front of her.  Most of us are not equipped to handle this without professional help.  Her new team should include a registered investment advisor who is a fiduciary, an estate attorney, a CPA, a public relations manager, and a therapist.  Hopefully, this will keep her from becoming part of the 70% who win a lottery and end up broke within a short period of time.

Since Ms. Wanczyk has gone public with her lottery winnings, all of her long-lost relatives will be coming out of the woodwork, as well as everyone with a cause who will try to get her to make a donation.   This is where a public relations manager comes in, shielding her from the plethora of requests.

She has also quit her job at Mercy Medical Center.   So, what will her new identity be?  What will she do with her time other than “relaxing?”  What will her new purpose be?  This is where her team of advisors will play a critical role.

On the good side of this situation, Ms. Wanczyk has an opportunity to explore her passions.  She can travel and explore, or even potentially make an amazing philanthropic difference.  What an exciting prospect of giving life-changing assistance from one who has had her life changed!!!  She also has the opportunity to put her 2 children, ages 31 and 26, in a position to follow their dreams and passions.  Finally, Ms. Wanczyk gets to “dream a new dream” for her own life.  If handled correctly, she has the rest of her life to accomplish this without any financial worries.   Again, her advisors can help her navigate these and other options.

With the odds of winning the lottery being some crazy 1 in a (insert very large number), we will probably never hold the winning ticket.  But we may experience a similar life-changing financial event, like receiving an inheritance or a pension lump-sum, or watching our employer’s stock skyrocket.  When these situations happen, you too need a team of advisors, and this is what our team at Avier Wealth Advisors does for our clients.  We can draw a lot of parallels to Ms. Wanczyk’s situation, with one difference being our money total may have a few less zeros in it.

As we near retirement age, we look at that next phase of our life being a type of utopia:  our lives are no longer ruled by an alarm clock, we can vacation whenever we want, etc.   Lars Phillips, my colleague, has a great line for this:  “you know what you are retiring from, but what are you retiring to?”  Just as Ms. Wanczyk gets to dream a new dream for her life going forward, retirees have that same opportunity.  This requires planning and honest conversations with yourself, your partner and your advisory team.  This is what we do for our clients.

When we work with our clients to create a financial plan, we are actually crafting a life plan. Moving forward, this is something that Ms. Wanczyk will hopefully do with her advisors.  Yes, financial plans include a bunch of numbers which represent income, expenses, future events and their cost, just to name a few.   But, they also include discussions about passions and dreams, as life needs meaning and purpose, giving back and paying forward, regardless of our age or the size of our bank account.

In all cases for our clients, we act in our fiduciary role, being that trusted advisor, a voice of reason, willing to have those hard conversations.  As we look back on our Powerball winner’s situation, hopefully her advisors will be doing all of these same functions for her.

Posted by Carly Atkins on August 25, 2017