Author Topic: Asked to help a family member, what to do?  (Read 4274 times)

RealCanadianSavings

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Asked to help a family member, what to do?
« on: April 21, 2014, 12:11:47 AM »
A close relative has asked me to manage her 1.2 mil portfolio. She's 65 and unhappy with the 1.25% fees her current advisor is charging. (Ouch!)

I'm a bit torn. On the one hand I'm sure I could build a diversified low cost portfolio that meets her moderate income needs, on the other hand, she's family and if ever she was unhappy, I'd be dismayed.

I'm currently planning on taking her to interview a few other financial advisors to see if we can find a fee only planner that is more reasonable, but even still, having a local advisor costs $$$.

What would you do?

innerscorecard

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Re: Asked to help a family member, what to do?
« Reply #1 on: April 21, 2014, 03:29:59 AM »
Does she have the temperament to stay the course when the market drops? What did she *actually* do in 2008? At the very least I'd ask her those questions. :p

snareman1

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Re: Asked to help a family member, what to do?
« Reply #2 on: April 21, 2014, 03:39:13 AM »
A friend of mine is one of the founders of Abacus Wealth Partners. They are very respected and take a flat 1%. Feel free to check them out if you're looking for someone to handle her portfolio. http://abacuswealth.com/abacus-story/

gecko10x

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Re: Asked to help a family member, what to do?
« Reply #3 on: April 21, 2014, 06:00:47 AM »
1% is far too high. You can find a person to do it for <0.5% easy, and if you can handle no "person", robo-advisers are even less still.

aj_yooper

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Re: Asked to help a family member, what to do?
« Reply #4 on: April 21, 2014, 06:20:32 AM »
That is a big compliment to your skills, but ...  I would not manage a relative's finances, but I would suggest using Vanguard or Rick Ferri's Portfolio Solutions.  They both would be less expensive and probably better than her current adviser. 

Grateful Stache

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Re: Asked to help a family member, what to do?
« Reply #5 on: April 21, 2014, 06:36:09 AM »
I agree with others: I would never manage a relative's portfolio, especially a portfolio that substantial.

With my family, I try to steer them in the right direction, but I would never actively manage their funds. I tell them about companies that have a good reputation. I've also looked at overall asset allocation and total fees just to make sure they aren't getting screwed. Other than that, it's their money and I want nothing to do with it. Too much risk involved if the market tanks.

Cheers. 

soccerluvof4

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Re: Asked to help a family member, what to do?
« Reply #6 on: April 21, 2014, 07:27:42 AM »
I agree with ^ with that kinda portfolio send them to the Vanguard website and let them run the risk profiles and invest it index funds and be done with it. Maybe send them the link to Collins strategy.  Anything else your just asking for trouble imho.

Another Reader

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Re: Asked to help a family member, what to do?
« Reply #7 on: April 21, 2014, 09:00:26 AM »
Vanguard's new Personal Advisor Service might be a good hybrid for her.  She would get a person to talk to, a financial plan, and a diversified portfolio of Vanguard funds selected for her age and goals for 0.3 percent annually.  At 65 and relying on an "advisor," she's probably not ready to do it herself.  If she decides to do it herself after a while, she can switch at no cost.

totoro

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Re: Asked to help a family member, what to do?
« Reply #8 on: April 21, 2014, 09:52:16 AM »
I think the OP is in Canada?  The US investment advice won't work here.

Go to the Canadian Couch Potato website: http://canadiancouchpotato.com/model-portfolios/.  Order the book if you don't understand how to do it.  Get your relative to read it, if she agrees with it help her open the accounts and let her make her own investments. 

There are some flat fee couch potato advisors out there too if you would prefer to be more hands off.

totoro

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Re: Asked to help a family member, what to do?
« Reply #9 on: April 21, 2014, 09:53:09 AM »
Also make sure you check out fees that may be charged for transferring the funds.  Sometimes these are significant.

RealCanadianSavings

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Re: Asked to help a family member, what to do?
« Reply #10 on: April 21, 2014, 02:45:34 PM »
Does she have the temperament to stay the course when the market drops? What did she *actually* do in 2008? At the very least I'd ask her those questions. :p

She actually bought a house in 2008 when the market tanked. She's been fairly good about staying the course, but it does stress her out.

1% is far too high. You can find a person to do it for <0.5% easy, and if you can handle no "person", robo-advisers are even less still.

Yes, I'm trying to find her someone capable for 0.5%. She's going to need someone to talk to, whether that is me or a 3rd party.

That is a big compliment to your skills, but ...  I would not manage a relative's finances, but I would suggest using Vanguard or Rick Ferri's Portfolio Solutions.  They both would be less expensive and probably better than her current adviser.

Unfortunately in Canada we don't have the same services from Vanguard. Maybe one day they will launch the adviser channels similar to what they have in the US. I hadn't looked at Rick Ferri before, i'll have to do some research.

Go to the Canadian Couch Potato website: http://canadiancouchpotato.com/model-portfolios/.  Order the book if you don't understand how to do it.  Get your relative to read it, if she agrees with it help her open the accounts and let her make her own investments. 

There are some flat fee couch potato advisors out there too if you would prefer to be more hands off.
That's a good idea. I'm going to get her some literature and see if she's more keen on investing independently after she's done some self education. I've always liked Canadian Couch Potato myself.  I found an article on MoneySense with a list of Fee-only planners, but it's not quite the same as finding a list of Fee-only plannes that also advocate index investing. If you have any tips on finding someone, let me know!

Also make sure you check out fees that may be charged for transferring the funds.  Sometimes these are significant.
That's a good point too.

Thanks everyone.