The majority of people do not have much experience managing substantial sums of money so when they receive an unexpected windfall, a lot of lottery winners need practical advice on how to manage their winnings. Lottery winners in the UK are able to seek initial support from a panel of legal experts and financial advisers provided by the National Lottery in order to help make important financial decisions. For lottery winners, the indispensable help from a financial adviser can mean the difference between living an independently wealthy life and going broke after a short period of time.
It is all too easy to make huge mistakes that cost several thousand pounds. One typical example of these financial errors is purchasing a large home located in a desirable neighbourhood only for the lottery winner to later realise that they are unhappy with their home. This prompts the winner to put their property on the real estate market and pay the associated legal and estate agent fees and extra stamp duty. To prevent from going into financial ruin, financial advisers recommend that lottery winners allow a private bank to hold their winnings until they get independent tax, legal and financial advice.
Financial advisers are adept at instructing those with limited money-management experience who have become overnight millionaires. Advisers allocate much of their working time to devising a smart financial strategy for their clients. The goal of their strategy is to make sure their clients are handling their windfall in the smartest way possible in order to reach short-term and long-term financial goals.
Depending on their clients’ tolerance for losses and overall goals, a financial adviser will also contemplate the best place for their clients to put their money. For instance, the advisor may suggest that their client invest in bank accounts, bonds, property or the stock market. In addition, the advisor will take into account tax-efficient ways to invest while considering capital gains tax allowances, individual savings accounts, or ISAs, and other investment channels.
And of course, the financial adviser will discuss with their clients about the costs for financial advice and portfolio management. Lottery winners must not forget that these services come at a price with charges and fees that can slowly accumulate. Because lottery winners quickly go from the excitement of winning a life-changing sum of money to the sometimes overwhelming task of figuring out how to manage that money, expert financial advice is absolutely necessary. As long as lottery winners follow the right advice, they can enjoy their winnings throughout their entire lives.