Author Topic: Do you give un-requested financial advice??  (Read 4796 times)

MrGville

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Do you give un-requested financial advice??
« on: February 03, 2017, 07:39:38 AM »
The reason I am thinking about this is because of some comments that a few of my friends have made about their financials. 

For example: This past weekend, my friend (who works for a public middle school) started talking about how he had just enrolled in his employers retirement plan, and he was excited to finally start saving for retirement (he's 26).  He then mentioned that he was also happy about his plan and his adviser because he "is only paying 2% in fees."  I didn't say anything about how 2% was extremely high because we were in a group of people and I didn't want him to be embarrassed.  Its now been about a week since he made that comment, and I'm still thinking about it.  I feel like i would be doing him a huge disservice if I didn't say something about how he's being cheated out of a large portion of his earnings.  This is one of my best friends, so I am planning on talking to him about this next time we are together.

Another of my friends has recently made a comment about how its strange that people feel like they need to start saving for retirement before they turn 35.  He's somewhat of a know-it-all, and I suspect he would not believe me if I told him about FIRE and MMM. 

It can be very difficult to get people to think outside of the financial norm.


BrickByBrick

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Re: Do you give un-requested financial advice??
« Reply #1 on: February 03, 2017, 09:37:57 AM »
Generally I've found you have to wait for people to ask, otherwise unsolicited advice can come off as arrogant-sounding (money being the last taboo and all).  When finances ever come up naturally in a conversation (somewhat rare) I sometimes look for an opportunity to throw a nugget of FI-wisdom out there.  If it's ignored you forget it and move on.  Every now and then though it might spark something in someone, and they may then ask you about it in more detail.  If that happens, discuss it in more depth but don't wear them out - and this part is very important in my opinion - you have to direct them to online sources to continue reading and learning.  Don't try and appoint yourself as their financial mentor.  Direct them to the MMMs/JLCollins/Bogles of the world so they can learn on their own.  By learning on their own and at their own pace within the FI(RE) community, it tends to stick better. 

Go figure, some people are willing to trust strangers on the internet before the person in front of them.

For your friend, in your next private conversation with him, try to gently steer the conversation to retirement and then bring it up that 2% actually sounds a bit high - mention index funds, etc - but tell him where your learned your opinions and encourage him to check those blogs/sites out.

For your know-it-all friend, perhaps tell him he should check those blogs/sites out and just leave it at that.  Someone like him may only learn by not being confronted with it (must be fooled into coming up with it on his own).

WildJager

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Re: Do you give un-requested financial advice??
« Reply #2 on: February 03, 2017, 09:40:23 AM »
I don't directly, as with any advice unsolicited usually is a lost cause.

I sometimes will *tactfully* throw out overly complex financial jargon that disproves whatever point was made.  This is usually met with silence since no one in the room knows what I'm talking about. 

Then I wait.  Often times people will come to me in private to ask for advice, and then I start with baby steps and give advice in much more clear terms.

I'm planting the seed basically.  However, the amount of people who actually pick up on that seed and try to learn something is usually very low.  Most seem just fine and dandy to continue with whatever trash source of knowledge they've been learning from so far (here's to you Yahoo finance).

WildJager

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Re: Do you give un-requested financial advice??
« Reply #3 on: February 03, 2017, 09:45:35 AM »
Go figure, some people are willing to trust strangers on the internet before the person in front of them.

Ain't that the truth, but there might be a culture shift at play.  In today's world of instant fact checking, I think people are starting to realize that a lot of their peers are full of shit.  Validating the truth via the interwebs is actually a good thing IMO.  Though, of course, the internet can lead some people down a rabbit hole via confirmation bias.

nobody123

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Re: Do you give un-requested financial advice??
« Reply #4 on: February 03, 2017, 10:36:17 AM »
No good can come from it.  Experience has taught me that I can't possibly know all of the circumstances why a person / family spends their money the way that they do.  In general, my friends and family know I'm good with money / investments and occasionally ask me for advice, but they almost always ending up doing what they initially thought of doing anyway.  If someone has it in their head that buying a boat is a good idea, all of the financial logic in the world isn't going to change their mind.  Giving unsolicited advice is a waste of breath at best and is more often than not considered rude.


tarheeldan

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Re: Do you give un-requested financial advice??
« Reply #5 on: February 03, 2017, 10:41:42 AM »
Attraction rather than promotion. I find it's better to share my personal experience when it comes up, and word of mouth has gotten around with people I know that I'm someone to see if you would like to work on your finances.

I think you were smart and kind not to embarrass your friend in front of others. If I were you and saw him again alone, I might say "I was thinking about what you said, and I looked at my own fees - I'm only paying 0.25% " (or whatever is accurate)

boarder42

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Re: Do you give un-requested financial advice??
« Reply #6 on: February 03, 2017, 10:57:23 AM »
i mention it all the time our anticipated FIRE age and some people will scoff and make fun esp in a group think situation.  but more often than not 1 or 2 people will approach me after and say what are you talking about.  how can i do this i want some advice. 

as for the 2% i fought something similar about 4 months ago but it wasnt really a friend as much as it was a coworker basically just friends at work.  he told me he was with edward jones.  and since he was from STL i didnt want to say anything bad about them b/c his family could have been easily involved with them b/c they are HQd there.  It really wore on me for a couple weeks and finally i just thought i'm gonna throw this out there

He was open and recpetive and in the end very appreciative and now has an account with vanguard.  come to find out his mom did work for them on the customer service side but she really didnt like the company so he wasnt emotionally attached. 

I look at it as saving a life.  There are far too many people out there pushing their religion.  just think if people were on street corners pushing mustachianism etc.  if he really is your friend you should bring it up.

Something like you said you were paying 2% the other day to an advisor.  Tell him you've been struggling with bringing up how much money his advisor is essentially taking from him.  see how he receives that. Millenials are much more receptive to money talks than past generations i've found.

jamesbond007

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Re: Do you give un-requested financial advice??
« Reply #7 on: February 03, 2017, 11:08:50 AM »
I used to give unsolicited advice to my close friends and family. Now I just stick to family. Stopped bothering even about close friends unless they specifically ask for an advice. The problem with people is that even when they ask for an advice they are not actually looking for an advice. There is some research done by some scientists about this. Anyway, the problem I noticed is that it either leads to a heated argument (if the other party is "half-knowledged") or the other person just completely ignores you. It is the first outcome that I am afraid of. The last thing I want is ruined relationships. So I just listen to all the stupidity, tell to myself that it was a stupid decision etc. and just say OK and move on.

For example, a close friend of mine recently sold his perfectly capable working Honda and leased a BMW i3 for $400 a month. He was boasting about how cheap the lease was and what he did to get that price etc.... I was cringing inside but stayed quiet. It still bothers me somewhat but I will forget about it soon. Not my place to give advice.

boarder42

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Re: Do you give un-requested financial advice??
« Reply #8 on: February 03, 2017, 11:14:53 AM »
I used to give unsolicited advice to my close friends and family. Now I just stick to family. Stopped bothering even about close friends unless they specifically ask for an advice. The problem with people is that even when they ask for an advice they are not actually looking for an advice. There is some research done by some scientists about this. Anyway, the problem I noticed is that it either leads to a heated argument (if the other party is "half-knowledged") or the other person just completely ignores you. It is the first outcome that I am afraid of. The last thing I want is ruined relationships. So I just listen to all the stupidity, tell to myself that it was a stupid decision etc. and just say OK and move on.

For example, a close friend of mine recently sold his perfectly capable working Honda and leased a BMW i3 for $400 a month. He was boasting about how cheap the lease was and what he did to get that price etc.... I was cringing inside but stayed quiet. It still bothers me somewhat but I will forget about it soon. Not my place to give advice.

i think leasing a BMW is far less impactful to an entire life in money than paying an advisor 2% a year.  if you assume you need 1MM to retire and you will be retired 30 years and you forget all the money you gave away at 2% in saving to get there.  once retired for those 30 years your advisor will take 2.5MM of your dollars vs vanguard taking 80k.  this is a much bigger issue than some guy leasing a BMW. 

The real issue is 2% should be illegal.

SpareChange

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Re: Do you give un-requested financial advice??
« Reply #9 on: February 03, 2017, 11:20:01 AM »
Attraction rather than promotion. I find it's better to share my personal experience when it comes up, and word of mouth has gotten around with people I know that I'm someone to see if you would like to work on your finances.

+1. Word travels at the speed of sound. I get the occasional question or request for help with 401k setup. Pleasant position to be in.

J_Stache

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Re: Do you give un-requested financial advice??
« Reply #10 on: February 03, 2017, 11:49:46 AM »
I'll offer unsolicited advice on case by case basis.  This doesn't happen too often, but a few examples:
1.  In conversation with younger coworkers about moving out of their parents place, I mentioned that if I could do it again, I'd live with my parents (assuming they are driving me/you crazy) for reduced rent (and max out 401k) instead of renting at market rate. 

2.  My Best friend went back to grad school and after graduating I told him to start attacking his student loans since extra payments are worth so much more (in interest reduction) at the beginning of the amortization schedule.


If I don't know the person well enough to know how they'll react, I won't say much.

Mgmny

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Re: Do you give un-requested financial advice??
« Reply #11 on: February 03, 2017, 11:52:13 AM »
This is a constant struggle for me! Some of our friends are just so stupid with their money, and i want to scream at them and tell them their hair is on fire, and they are in a debt emergency, but i don't want to ruin our friendship, and i'm not convinced it's my place to tell them how to run their life. I mean, being in debt up to your eyeballs seems to work for the vast majority of americans, so why can't it work for my friends?

It's a little bit harder to rationalize this when it comes to family members, specifically my 85 year old grandmother, who is making some of the most terrible financial mistakes ever, and she won't listen to any of her children. I don't really care about her blowing my potential inheritance, but for godsake, she doesn't need to write a check for $90 a week to publishers clearing house.....

nobody123

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Re: Do you give un-requested financial advice??
« Reply #12 on: February 03, 2017, 11:53:59 AM »
The real issue is 2% should be illegal.

But even if they only netted 5% after the 2% fees, they will still be miles ahead of just sticking the money in a brick-and-mortar bank savings account at 0.1% interest.  Take away the marketing that the 2% provides and you have a whole lot of folks not in the market at all.

Cassie

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Re: Do you give un-requested financial advice??
« Reply #13 on: February 03, 2017, 11:55:17 AM »
If it was a really close friend I might say something and then drop it.

jamesbond007

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Re: Do you give un-requested financial advice??
« Reply #14 on: February 03, 2017, 12:20:35 PM »
I used to give unsolicited advice to my close friends and family. Now I just stick to family. Stopped bothering even about close friends unless they specifically ask for an advice. The problem with people is that even when they ask for an advice they are not actually looking for an advice. There is some research done by some scientists about this. Anyway, the problem I noticed is that it either leads to a heated argument (if the other party is "half-knowledged") or the other person just completely ignores you. It is the first outcome that I am afraid of. The last thing I want is ruined relationships. So I just listen to all the stupidity, tell to myself that it was a stupid decision etc. and just say OK and move on.

For example, a close friend of mine recently sold his perfectly capable working Honda and leased a BMW i3 for $400 a month. He was boasting about how cheap the lease was and what he did to get that price etc.... I was cringing inside but stayed quiet. It still bothers me somewhat but I will forget about it soon. Not my place to give advice.

i think leasing a BMW is far less impactful to an entire life in money than paying an advisor 2% a year.  if you assume you need 1MM to retire and you will be retired 30 years and you forget all the money you gave away at 2% in saving to get there.  once retired for those 30 years your advisor will take 2.5MM of your dollars vs vanguard taking 80k.  this is a much bigger issue than some guy leasing a BMW. 

The real issue is 2% should be illegal.

Of course. I just gave an example.

omachi

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Re: Do you give un-requested financial advice??
« Reply #15 on: February 03, 2017, 01:22:57 PM »
I don't give unsolicited advice, but try to lead by example. In the case of the fees mentioned, I would probably just note offhand that low fees are important. If I knew the we weren't in a place for potential embarrassment and I cared about this person, I would note they should check to see if they're really getting a deal, as all of mine are under 1%. Otherwise if I cared, I would make a mention of it later in private. If I don't know or care about the person, I'm not sticking my neck out to see how they react. However, I don't see comparisons on a topic somebody brought up as unsolicited, and I'm not really giving advice, just a point of comparison.

That said, when people do come to me for advice, I'm honest and straightforward. Some friends take it to heart more than others. And it can be really difficult to see somebody take part of your advice and then go off in the wrong direction. Case in point, a friend that had various debts at some fairly unfavorable rates. He asked for advice and I suggested to roll it up into an unsecured personal loan at a lower rate and to pay it off as quickly as he could. He rolled everything up but instead went for a longer term to reduce the payment from what he had been able to pay monthly already so he could "free up cashflow" which he then spends monthly. He's still better for it because he'll still pay less in interest and he's not putting that additional amount on credit, so I'm happy I could help, but still. He could be saving something instead of just trying to get back to zero. After years he may be coming around, though, as he mentioned he had a savings goal very recently.

I guess the point of that longwindedness is to be careful with your advice. I've never admonished my friend for his choices, just tried to shed light on the path forward. Lead by example, give advice when asked and without being attached to the outcome, and eventually people may come around.

boarder42

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Re: Do you give un-requested financial advice??
« Reply #16 on: February 03, 2017, 02:28:50 PM »
I used to give unsolicited advice to my close friends and family. Now I just stick to family. Stopped bothering even about close friends unless they specifically ask for an advice. The problem with people is that even when they ask for an advice they are not actually looking for an advice. There is some research done by some scientists about this. Anyway, the problem I noticed is that it either leads to a heated argument (if the other party is "half-knowledged") or the other person just completely ignores you. It is the first outcome that I am afraid of. The last thing I want is ruined relationships. So I just listen to all the stupidity, tell to myself that it was a stupid decision etc. and just say OK and move on.

For example, a close friend of mine recently sold his perfectly capable working Honda and leased a BMW i3 for $400 a month. He was boasting about how cheap the lease was and what he did to get that price etc.... I was cringing inside but stayed quiet. It still bothers me somewhat but I will forget about it soon. Not my place to give advice.

i think leasing a BMW is far less impactful to an entire life in money than paying an advisor 2% a year.  if you assume you need 1MM to retire and you will be retired 30 years and you forget all the money you gave away at 2% in saving to get there.  once retired for those 30 years your advisor will take 2.5MM of your dollars vs vanguard taking 80k.  this is a much bigger issue than some guy leasing a BMW. 

The real issue is 2% should be illegal.

Of course. I just gave an example.

i bite my tongue on cars.  people are weird about them and i dont really think its that super awful compared to everything else people do.  i also work in a place with super great retirement.  I just did a calc the other day that if all my wife and i did was 401k match at both our companies and fill the HSA and roth IRAs and spent every other penny.  we would retire at 45 still.  that is 8-9 years of extra work but plenty young compared to the norm so all the people in the standard rat race spending their 20-50k bonuses on cars is a blip in their finances for retirement.

MrGville

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Re: Do you give un-requested financial advice??
« Reply #17 on: February 03, 2017, 02:44:58 PM »
I used to give unsolicited advice to my close friends and family. Now I just stick to family. Stopped bothering even about close friends unless they specifically ask for an advice. The problem with people is that even when they ask for an advice they are not actually looking for an advice. There is some research done by some scientists about this. Anyway, the problem I noticed is that it either leads to a heated argument (if the other party is "half-knowledged") or the other person just completely ignores you. It is the first outcome that I am afraid of. The last thing I want is ruined relationships. So I just listen to all the stupidity, tell to myself that it was a stupid decision etc. and just say OK and move on.

For example, a close friend of mine recently sold his perfectly capable working Honda and leased a BMW i3 for $400 a month. He was boasting about how cheap the lease was and what he did to get that price etc.... I was cringing inside but stayed quiet. It still bothers me somewhat but I will forget about it soon. Not my place to give advice.

i think leasing a BMW is far less impactful to an entire life in money than paying an advisor 2% a year.  if you assume you need 1MM to retire and you will be retired 30 years and you forget all the money you gave away at 2% in saving to get there.  once retired for those 30 years your advisor will take 2.5MM of your dollars vs vanguard taking 80k.  this is a much bigger issue than some guy leasing a BMW. 

The real issue is 2% should be illegal.

Of course. I just gave an example.

i bite my tongue on cars.  people are weird about them and i dont really think its that super awful compared to everything else people do.  i also work in a place with super great retirement.  I just did a calc the other day that if all my wife and i did was 401k match at both our companies and fill the HSA and roth IRAs and spent every other penny.  we would retire at 45 still.  that is 8-9 years of extra work but plenty young compared to the norm so all the people in the standard rat race spending their 20-50k bonuses on cars is a blip in their finances for retirement.

Boarder42,  If you don't mind sharing, can you provide some details about the retirement plan that your work provides?  Sounds pretty great!

boarder42

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Re: Do you give un-requested financial advice??
« Reply #18 on: February 03, 2017, 02:54:45 PM »
I used to give unsolicited advice to my close friends and family. Now I just stick to family. Stopped bothering even about close friends unless they specifically ask for an advice. The problem with people is that even when they ask for an advice they are not actually looking for an advice. There is some research done by some scientists about this. Anyway, the problem I noticed is that it either leads to a heated argument (if the other party is "half-knowledged") or the other person just completely ignores you. It is the first outcome that I am afraid of. The last thing I want is ruined relationships. So I just listen to all the stupidity, tell to myself that it was a stupid decision etc. and just say OK and move on.

For example, a close friend of mine recently sold his perfectly capable working Honda and leased a BMW i3 for $400 a month. He was boasting about how cheap the lease was and what he did to get that price etc.... I was cringing inside but stayed quiet. It still bothers me somewhat but I will forget about it soon. Not my place to give advice.

i think leasing a BMW is far less impactful to an entire life in money than paying an advisor 2% a year.  if you assume you need 1MM to retire and you will be retired 30 years and you forget all the money you gave away at 2% in saving to get there.  once retired for those 30 years your advisor will take 2.5MM of your dollars vs vanguard taking 80k.  this is a much bigger issue than some guy leasing a BMW. 

The real issue is 2% should be illegal.

Of course. I just gave an example.

i bite my tongue on cars.  people are weird about them and i dont really think its that super awful compared to everything else people do.  i also work in a place with super great retirement.  I just did a calc the other day that if all my wife and i did was 401k match at both our companies and fill the HSA and roth IRAs and spent every other penny.  we would retire at 45 still.  that is 8-9 years of extra work but plenty young compared to the norm so all the people in the standard rat race spending their 20-50k bonuses on cars is a blip in their finances for retirement.

Boarder42,  If you don't mind sharing, can you provide some details about the retirement plan that your work provides?  Sounds pretty great!

We're a privately held S-Corp ESOP.  only way to get shares is to work here.  Only way to get money to purchase shares is given to you by the company.  when you leave you have to sell them all back.  we make insane returns that will continue for a long time.

Dicey

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Re: Do you give un-requested financial advice??
« Reply #19 on: February 04, 2017, 02:54:59 PM »
Only on this forum, unless asked. I do give out the MMM website info to anyone who I think might be interested. I will happy lead the horse, but no hand-feeding.

Fomerly known as something

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Re: Do you give un-requested financial advice??
« Reply #20 on: February 04, 2017, 06:24:06 PM »
At work I pass on the same wisdom that I received as a young employee.  Put as much $ into the TSP as you can, and if you can max that thing out.  If you can't max it out add half of your raises until you max it out.  Otherwise I refrain unless asked.

Dave1442397

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Re: Do you give un-requested financial advice??
« Reply #21 on: February 04, 2017, 06:29:19 PM »
It's a little bit harder to rationalize this when it comes to family members, specifically my 85 year old grandmother, who is making some of the most terrible financial mistakes ever, and she won't listen to any of her children. I don't really care about her blowing my potential inheritance, but for godsake, she doesn't need to write a check for $90 a week to publishers clearing house.....

That sucks. My MIL is 87 and I've been taking care of all her finances since my FIL died last year. She actually has around $100k in investments that I'm working on getting over to Vanguard, and a couple of condos worth maybe $150k together. She's doing fine, so I gave up on trying to get her to stop using the stupid boardwalk ATMs in Atlantic City that charge her $5 for every withdrawal. In the overall scheme of things, it's not too bad.

Lski'stash

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Re: Do you give un-requested financial advice??
« Reply #22 on: February 04, 2017, 07:16:56 PM »
At least, for your middle school teacher friend, show them this website:http://403bwise.com/k12 and this video https://www.youtube.com/watch?v=gvZSpET11ZY by John Oliver on Fiduciaries. In my opinion, if they mention it, you are free to at least give your opinion. I love the John Oliver video because he explains things in a way that are not preachy at all, but also he's knowledgeable, and it's super entertaining.

For the other friend, at least mention what you have done? I mean if they bring it up, I say it's at least fair to state your own opinion. Just try to do it without judging your friend.

Dollar Slice

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Re: Do you give un-requested financial advice??
« Reply #23 on: February 04, 2017, 08:14:23 PM »
I will offer my assistance if something comes up and it sounds like someone needs help. E.g., "I really need to work on my budget," or "I just got a new job with a 401k and I have no idea where to put my money" etc.

At work we've had quite a bit of change in our benefits over the last few years, so whenever it comes up I will offer my assistance. "If anyone needs help figuring out the 401k options or picking a health insurance plan, I'm happy to help, I've done lots of research on this stuff." I won't make any complicated recommendations but I'll encourage them to do a really simple set-it-and-forget-it kind of plan, like a target date retirement fund.

But if someone is just bitching and moaning, like a friend last night who said he would "never be able to retire" even though he and his wife are DINKs with good jobs, I won't say a word. With those kind of people I might try to lead by example rather than talking about it. Nah, I don't need another drink / I'm not going to take a taxi / I'm not going away for the holiday weekend ... I'd rather save my money.

In the OPs example, I'm not sure it's helpful to point out that he has a lousy fee structure in his 401k plan, since he's kind of stuck with it. (Unless the adviser is something he's paying extra for?) If he changes jobs in the future, encourage him to roll it over ASAP and explain about the fees then.

Dmy0013

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Re: Do you give un-requested financial advice??
« Reply #24 on: February 05, 2017, 09:00:51 AM »
I avoid giving advance at all costs.  And when asked to do so I make it very clear it is my personal opinion, and only that.  Nothing I say should be taken as professional advice, and everyone is different and they need to make their own decisions based off their own needs.

Friends have come to me in the past for advice and I typically just provide them with a link or two to some good information.  Only 1 person have ever come back and said thanks and asked for more information.  That tells me the other people are not even reading it.  And if they won't take 5 minutes to read something I can't expect them to take the setup time and the maintenance to invest on their own.

So once again I typically avoid at all costs.

I think a better question is can there be any legal issues found with pushing investment advice on others?  Say You tell someone to purchase company 1-2-3-A-B-C-3-2-1 and it goes bankrupt the next day, can you be found responsible in some way?  Say you tell them its a guaranteed thing!?

CheapScholar

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Re: Do you give un-requested financial advice??
« Reply #25 on: February 05, 2017, 09:34:35 AM »
The most advice I'll give is to say something like, "maxing out a 401K every year can be a really good deal.  The tax savings alone are amazing."

I once told one of my best friends this and he responded that he would like to "max out" but it's tough to save.  He then said "maxing out" was 4%.  I learned he was referring to the company match.   I just let it go.  This guy lives in LA and eats out/goes out for drinks all the time.  CC debt still but frequent trips to go gambling in Vegas.  He'll work til he dies so what's the point explaining it.