Financial advice for lottery winners: what you need to know
It’s exciting to win the lottery, but what should you do with your money? Here’s how to navigate the financial challenges a major windfall can present.
Winning the lottery can be a euphoric experience, but once the champagne is drunk and the dust settles, you may find yourself struggling to cope with your newfound wealth.
You may also find it difficult managing the expectations of others, such as your family. This new situation can be daunting and put unexpected pressure on your relationships.
It’s worth not doing anything rash with your newfound wealth and seriously considering qualified financial advice.
Some wealth management firms have specific expertise in helping lottery winners.
An adviser can help you support your family financially and maintain boundaries.
Wealth managers can recommend tax-efficient ways of gifting and investing.
Make sure you choose a wealth management firm authorised and regulated by the Financial Conduct Authority (FCA).
How do I manage my newfound wealth?
It might be tempting to splash out immediately on big-ticket items, but it’s best not to make any major financial decisions until you have received specialist wealth management advice on what to do with your winnings.
You will need to find a specialist adviser to help you manage your new financial situation.
Unbiased can help find a qualified financial adviser specialised in helping lottery winners to help you manage your new wealth. Make sure you choose a financial adviser who is qualified, authorised and regulated by the FCA.
They should also have at least a Level 4 diploma for financial advisers that is recognised by the FCA.
They must also put in writing to you whether they are a restricted or independent financial adviser and how their advice may be restricted. Restricted financial advisers can only recommend products from certain companies or provide advice on specific areas of expertise.
Make sure to ask a financial adviser about their fee structure and request recommendations from previous clients.
Unscrupulous actors can try to target lottery winners, so you should find out about your financial adviser’s background before committing to using their services.
If you’ve won the National Lottery, the team there will be on hand to provide initial help in the first instance.
Some wealth management firms may also have specific expertise in helping lottery winners navigate their new situation.
This will begin with an initial consultation to find out what you want to do with your money and ensure that your new financial adviser is suitable for your needs.
What are the tax implications of winning the lottery?
In the UK, you won’t pay tax on your lottery winnings. However, you will have to pay tax on any interest or income you make from your money through savings or investments.
A qualified wealth management adviser can help you invest your money in the most tax-efficient way, as well as ensure it generates income for you.
How do I manage family expectations?
Winning a large sum can affect your relationships with friends and family, so it’s important to think carefully about how to share your wealth while maintaining boundaries.
A financial adviser can help encourage responsible wealth management between family members, as well as advise on the most efficient ways to share wealth.
It’s currently possible to give up to £3,000 a year to individuals without incurring inheritance tax. Plus, other tax-efficient vehicles can be made use of, such as individual savings accounts (ISAs), trusts and the Gift Aid scheme.
If you wish to give substantial sums to charity, a wealth manager can help introduce you to well-established charitable causes and manage any gifts made tax efficiently.
How should I invest my winnings?
A qualified wealth manager will help you put together a financial plan to ensure your money lasts and it isn’t whittled away by extravagant spending or poor investments.
They will help you determine your risk tolerance, future plans and interests and the best investments to suit your needs.
Who are the best wealth management firms for lottery winners?
If you’ve recently come into a significant windfall, such as a lottery win, it’s worth considering wealth management firms with proven experience in handling sudden wealth.
We selected leading wealth management firms consistently mentioned for their outstanding service, expertise, client satisfaction and the biggest in terms of assets under management (AUM).
| Firm | Client funds | Minimum account size |
|---|---|---|
| Saltus | £8 billion | £250,000 |
| Rathbones | £100 billion | £100,000 |
| Quilter | £106 billion | £250,000 |
| Cazenove Capital | £76 billion | £1 million |
| Charles Stanley | £27 billion | £250,000 |
| St James’s Place | £179 billion | £50,000 |
| Niche Private Clients | £1 billion | £100,000 |
| Evelyn Partners | £53 billion | £50,000 |
| Stonehage Fleming | £134 billion | £500,000 |
| RBC Brewin Dolphin | £52 billion | £150,000 |
When deciding whether a wealth management firm is best for you, it's worth looking at many factors aside from AUM.
How do I plan for the future?
It’s important to have the right strategy in place to plan for the future and work towards your financial aims, whether this is to purchase property with your lottery winnings, donate to charity, or set up a trust fund for your family members.
Wealth managers can also model your forecast future cash flow to keep your financial plans on target and give you peace of mind.
This will also help you determine whether you need to continue working or can retire on the income from your winnings.
Often, they will have strong links with legal firms to provide you with advice on wills, powers of attorney, and how best to manage your estate for inheritance tax purposes.
It’s important to take the time to enjoy your lottery winnings and make the most of them, rather than let them become a burden.
You should avoid rash financial decisions before seeking good quality financial advice from a wealth management firm authorised and regulated by the FCA.
Unbiased can quickly match you with a qualified wealth management adviser.
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