On a cold evening in January of 2009, 74-year-old corporate titan Adolf Merckle drove to a railway embankment near his home in Germany and stepped in front of a moving train.

Once, Merckle had been a billionaire. In 2007, Forbes estimated his fortune at $12.8 billion. But, as the global recession took hold in late 2008, his net worth nose-dived. Estimates put Merckle's losses at several billion. He was forced to relinquish control of a family business that had been founded by his grandfather in 1881 and that he'd grown into Germany's largest pharmaceutical wholesaler.

Still, in December of 2008, Merckle was one of the wealthiest individuals in the world — with an estimated $9.8 billion. Yet, he despaired and killed himself.

Many are surprised that people who remain fabulously wealthy, even after huge financial losses, should suffer catastrophic emotional crises. A decline in net worth from $100 million to $50 million is upsetting, maybe even devastating. But, usually, it will have little effect on a person's ability to live in a good home, feed and educate family, enjoy vacations, and retire comfortably — very comfortably. Such breakdowns seem more understandable for people who've been financially ruined.

Yet, this financial crisis is causing intense emotional distress among high-net-worth and even ultra-high-net-worth families. Indeed, mental health professionals report a dramatic increase in signs of acute psychological problems created by a sudden loss of wealth, status and stature. We're calling this disorder “financial loss syndrome.” It's manifested in insomnia, anxiety, shame, guilt, vulnerability and depression. Marriages collapse. Relationships with children become strained. Suicide becomes a seemingly viable option.

What should our response be? Clearly, now is a time for all of us to engage in thoughtful evaluations and discussions about our relationship to money and its meaning. Wealth owners would do well to engage in this endeavor — and lead their families along.

Throughout history there always has been some form of money used for the exchange of goods and services. In pre-industrial times, that is to say until the late 1800s, “money” often was a commodity such as land, salt or slaves. In modern history, money evolved into the form of currency we use today.

Of course, money in and of itself has no value other than its ability to obtain goods and services. But beyond its economic function, money was always a source of power and also clearly had social and psychological meaning. As the fiddler on the roof reminded us in the song “If I Were a Rich Man,” if you're rich, people think you really know. What, then, does it say about you to others if your wealth was lost?

Nowadays, people are fascinated with television shows like “The Real Housewives of New York City” and “The Fabulous Life of … ,” shows that depict rich, free-spending socialities and celebrities. People also love to read about even the most mundane activities of the super affluent. Googling the heiress “Paris Hilton” gets more than 60 million results!

When materialism is portrayed as so beguiling in an advertising-fueled mass-media culture, it's no wonder that individuals are willing to sustain excessive debt to acquire the external trappings of success. They begin to believe that material possessions are very important, so the more they have and the more expensive these things are, the happier they will be. Instead of merely using things, individuals feel defined by these possessions. And herein lies a key to the problem: the degree to which possessions or numbers on a financial statement become a reflection of internal worth, influences the degree of emotional devastation following financial loss.

We've seen firsthand that the sense of shame or embarrassment that a wealth creator feels with a spouse or among friends and peers, often is more intense vis-à-vis children and grandchildren. The wealth creator's family had perceived him as wise, perceptive, all-knowing and infallible. The sense of having let them down may overwhelm. The comfort that family members have had in the leadership of dad or mom, or grandpa or grandma, can be shattered by the knowledge that their protector has failed. Mistakes were made. Wealth was lost.

For this individual, loss of face and respect can be devastating.

But the perception that the relationships with family and friends will be permanently disrupted because of the erosion of the family wealth is often misplaced and exaggerated. Whether the economic loss is due to the general economic decline, investment in failed companies, or the selection of fraudulent managers or advisors, it offers a critical learning opportunity for parents and family and a chance to reorient priorities.

Equally powerful is a sudden feeling of vulnerability. A person who was once secure and insulated from uncertainties that afflict others may now have to contend with the possibility of a permanent change in lifestyle. It's not that hard work and a limited budget are unfamiliar to the wealth owner. But these belong to a stage that many had passed through and have no desire, or perhaps even energy, to go through again. And for people who inherited their wealth, those who had not themselves created fortunes and may never even worked for a living, the feeling of vulnerability may be even greater. For many inheritors, there is little likelihood of recovery.

How do we counteract fears of catastrophic ruin? Where does one begin? Here are a dozen key strategies:

  • Get real

    Probably the most important and universal rule when dealing with fear and anxiety is to face facts. We tell children to look under the bed so that they can see there are no monsters there. Adults often get into trouble when they desperately try to avoid facing harsh realities. They drink, take drugs, commit suicide, anything to skirt the issues. Yet, our fears and our imaginations are often far more terrifying than the actual facts.

    So, the first steps are as simple as they seem difficult: Take a deep breath and update your net worth statement (balance sheet). No one has to do this alone. Professionals are there to help. And now may be the best time to bring into the financial discussions spouses and adult children who in the past may not have been fully engaged in such matters. Reexamine overstated assets, understated liabilities, as well as tax- and estate-planning strategies that affect values and cash flow. Open up the curtains. Sunshine disinfects.

  • Create a spending plan

    It's a truism and it never was more true than now: Once a person knows what he really has, he can create a spending plan that addresses his real cash flow needs. Do what every successful business does every year: Develop a realistic budget. Anticipate volatility and change. Make sure you and others in the family understand the source and amount of revenues as well as fixed, variable and discretionary expenses. This may be the first time ever, or at least in many years, that the very affluent have had to limit expenses to fit within secure sources of income. What was taken for granted is no longer guaranteed. But there is no shame involved. It's what every successful business does every year.

  • Design a new wealth plan

    The focus should be both on your economic security and emotional well-being. Reevaluate the needs, expectations and opportunities of children and other potential beneficiaries of your wealth. See this time of upheaval as a welcome chance to help heirs set goals for themselves. Also, there's now a unique opportunity to shift wealth at a discounted value that hasn't been seen in decades.

  • Review your investment policy

    Look at both short-term and long-term goals, reevaluating just how much risk you're willing to accept now. Don't expect to recoup losses over the same time period that they were created. Be realistic and patient. Solid returns will happen over time — but not overnight.

  • Re-evaluate personal priorities

    Ask and answer the critical questions. How much is enough? How much do I really need to satisfy the basic needs of food, clothing and shelter? How should I now satisfy desires for vacations, family gifts, and contributions to charities within the realm of what is my now realistic spending limit? What is the purpose of my life and how can I achieve meaning independent of my financial resources?

  • Spend time building closer and more meaningful relationships with family and friends

    Increasing positive family connections provides each member the opportunity to address the crisis and support each other. All studies show that the more connected a person is to others, the less likely he is to suffer emotionally.

  • Give children honest answers to questions and reassure them

    Let all dependents and heirs know that, even though there may be some significant changes in lifestyle, the family and all its members will adapt and thrive. Use this opportunity to begin an open and continuing conversation with family about money, wealth and your lives. Be candid, but offer your perspective developed over many years of life experience. For many young adults, recession is a term that applied to others; for them, gravity was repealed. If they're crashing down to earth now, let them know that you'll be by their side to help them cope.

  • Use this opportunity to educate yourself and your children in financial competence

    Depending upon the decisions of others without being able to make informed choices increases a person's vulnerability. A lack of a sense of control can cause terrible psychological damage; for example, it's often at the root of post-traumatic stress disorder.

  • Get some perspective

    Remind yourself that whatever your circumstances may be, others are in much greater pain and risk. Your stress is real. But others are suffering too. Relieve your own pain by lending a hand and opening your heart to others.

  • Be thankful

    Write down one thing each day for which you can be thankful, remembering the adage “the best things in life are free.” What are you grateful for? Is it family, friends, community, health, intellectual curiosity, God, the beauty of nature, something else? Keep the list. Refer to it often.

  • Cultivate a sense of humor

    Laughter is the greatest painkiller of all. It's not an accident that professional comics often are those who had difficult childhoods. They survived by learning to laugh. Go to funny movies. Listen to comic's DVDs. Read funny books by comedians; George Carlin, Steve Martin, Woody Allen and others have some great ones. Also, think about what makes things amusing; take a look at books like Steve Allen's How to Be Funny: Discovering the Comic You.

  • Ask for help

    Seek professional help to deal with this trauma. Psychologists and other counselors are trained to help with this type of difficulty. If you are not in an area where you can physically visit a qualified professional, consultation can be handled by telephone.

Out of the Embers

Your financial wealth may have crashed and burned but, out of the embers, you can construct a new financial life for yourself, one more stable and secure, and perhaps less focused on materialism and status. More importantly, remember that your true net worth is not based on your financials, but upon your own sense of self worth and the love and respect of your family and friends.

Lee S. Hausner, far left, Douglas K. Freeman and Victoria Collins are principals of First Foundation, Inc, located in Irvine, Calif.