Am I wrong? [to assist family members with finances]

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Goal33
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Am I wrong? [to assist family members with finances]

Post by Goal33 » Wed Aug 05, 2015 12:32 am

Long story short - my portfolio is based on a ton of research (largely from here). I looked into what kind of asset allocation makes sense for me, tax efficiency, and which index funds I wanted to be invested in.

Both my brother and my mom know I am interested in finance and have both asked me for help with their own investments.

My mom has a a few IRAs with a bit of money in it, but it is completely cash... on 100k+ she earned 12 cents in interest last month. She's been asking me what to do and I tell her to roll her various accounts into Vanguard and invest in in the lifestyle fund 40/60. She says she doesn't know how, so I tell her to call Vanguard and they'll help her. She refuses and blames me especially as the market has been going up. I don't live nearby and I don't have time to take care of her financial business during the week. She doesn't work and could figure this out on her own. She has online shopping down to a science.

My brother has a similar story. I told him exactly what funds to invest in and he said he couldn't figure out Vanguard's website, so I told him to call them. He wanted me to log into his account and buy the fund for him because he couldn't figure it out. I refused to hand hold to that extent. My brother is in his late 20s and works in finance and is tech savvy but is just being lazy if you ask me. :oops:

Whenever finances come up, they're both angry with me. I honestly feel like I handed them gold and what would cost them thousands of dollars if they had a professional do it for them. Am I wrong to not literally hand hold them through the entire process and do it for them? I think this is basic stuff and if you know what funds you need to buy, you should be the one clicking it... especially if we're talking 100k+ for both of them.

On the flip side, my 90 year old grandma has also asked me for help. She managed to get it all done exactly like I told her and the money has been invested and growing for years. :beer

Do any of you have similar experiences with family and finance?
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Uncle Pennybags
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Re: Am I wrong?

Post by Uncle Pennybags » Wed Aug 05, 2015 12:38 am

I would not get involved, if you make them money the at-a-boy will not be worth the disowning if the market crashes. They don't seem that interested; at least they don't invest in "no money down real estate.

123
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Re: Am I wrong?

Post by 123 » Wed Aug 05, 2015 12:42 am

As you have observed they have to take ownership and responsibility for their own finances. They'd like you to do it so you can take the blame and guilt if things don't work out and the market values vary, which they will. If they're not willing to do it themselves they can call their broker (or Vanguard) to execute the trades for them. You're not wrong.

Unfortunately your relatives are the kind of people financial advisers love to find. There's not much you can do as far as I can see.
Last edited by 123 on Wed Aug 05, 2015 12:44 am, edited 1 time in total.
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in_reality
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Re: Am I wrong?

Post by in_reality » Wed Aug 05, 2015 12:42 am

I don't know your family so pardon me for saying this, but I suspect it has something to do with not wanting to take the responsibility. If you log in and make the transactions, they can always come back to you about your choices for their money and try to pin responsibility on you.

You told them what you know. It is up to them to take or not take actions on your and all other advice they get.

My brother and sister don't take my advice either. Ok fine, pay your advisors 1% for funds that cost 1% if you want. Don't say I didn't tell you...

DualIncomeNoDebt
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Re: Am I wrong?

Post by DualIncomeNoDebt » Wed Aug 05, 2015 1:52 am

Goal33 wrote:He wanted me to log into his account and buy the fund for him because he couldn't figure it out.
Don't do this, ever. If the selection goes south, you will never hear the end of it -- or worse, will be expected to make up any future losses. You need this kind of aggravation like you need a hole in your head.

sawhorse
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Re: Am I wrong?

Post by sawhorse » Wed Aug 05, 2015 3:01 am

People here are concluding that their inaction is driven by a desire to blame you if the investments don't work out. Based solely on what you've said, I didn't reach that conclusion. Is there a reason you feel that's their motivation?

I'd stick to recommending target date funds for them. Forget about all the asset allocation research you've done. They're clearly not interested. Target date funds also can serve to deflect blame because you can blame it on the target date manager for choosing an improper allocation.

I don't think you're allowed to do all the work for them as the accounts are under their names and they'll probably have to sign and submit things themselves.

22twain
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Re: Am I wrong?

Post by 22twain » Wed Aug 05, 2015 3:03 am

Just tell them, "if grandma can do it, so can you!" :P
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JoinToday
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Re: Am I wrong?

Post by JoinToday » Wed Aug 05, 2015 3:25 am

I am in partial agreement with sawhorse.

when I started reading about investing, I read a bunch of books and learned about diversifying your assets, etc, but I didn't really understand what I was suppose to do. It wasn't until I read Rick Ferri's All About Asset Allocation & seeing the the asset allocations with actual fund names that something clicked, and it all made sense. It seems extraordinarily simple now and I don't understand why it took so long for me to understand, but I still remember not knowing what to do.

I wonder if it is more that they really don't understand what they are suppose to do. I would sit down with them on the computer (with them pushing the keys) and show them what they need to do. And sit down once a month or quarter to show them about re balancing, putting money into the MMF & allocating from there, etc.

But I don't care for the target retirement funds. Too aggressive for younger people. I recommend Balanced index or 3 (or 2) fund portfolio.
I wish I had learned about index funds 25 years ago

DualIncomeNoDebt
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Re: Am I wrong?

Post by DualIncomeNoDebt » Wed Aug 05, 2015 4:02 am

sawhorse wrote:People here are concluding that their inaction is driven by a desire to blame you if the investments don't work out. Based solely on what you've said, I didn't reach that conclusion.
This is a misreading. What I and others have said is, if the investments don't work out, the original poster will be blamed for losses. We haven't ascribed reason for their inaction -- who knows why? We have been clear, however, about the likely consequences if the investment returns are negative.

GoldenFinch
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Re: Am I wrong?

Post by GoldenFinch » Wed Aug 05, 2015 5:30 am

My personal experience is that when one understands investing it seems simple, but when one doesn't understand investing it can be information overload and anxiety provoking. Some people become paralyzed by the amount of information they don't understand and are incapable of taking action.

I fully understand other posters' advice not to be a hand holder, but if you sat with them and went through the Vanguard website, and maybe showed them the Boglehead Wiki, you would be doing them a great favor. What they do after that is their business.

It is also okay not to get involved any more than you have already. (I am glad to hear that Grandma figured it out herself!)

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just frank
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Re: Am I wrong?

Post by just frank » Wed Aug 05, 2015 6:01 am

As a teacher, it is clear to me that every student needs a different push (or more to be cajoled in a different way) in order to get started. It is very easy to get frustrated with students who can't or won't do seemingly simple things after being provided with instructions. Figuring out your students 'block' is the hard part.

I would say that you are 'wrong' in the sense that the situation is unresolved, and causing ongoing emotional strain. I think you should forget about being a helpful son/brother, and think more about being a loving son/brother.

That said, don't log on for these guys. Make it clear that you will NEVER do that. But say it more like 'that would be really silly, given how dead simple it is'. But do offer to talk them through the screen (they are at the computer) either in person, or over the phone/skype/facetime. Hopefully, afterwards they will have a big 'sigh of relief' and incredulity at how easy it was, and they will be grateful and able to take it from there.

They are probably unconsciously afraid they will hit the wrong button and all their money will disappear into the ether.

Agreed with the above posts to stick to TR funds for now or potentially forever (unless they grow in maturity/comfort with this).

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Rob5TCP
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Re: Am I wrong?

Post by Rob5TCP » Wed Aug 05, 2015 7:24 am

At the very least - move some to a online savings account paying around 1%.
If they want to get a little exposure; wait for a special on a CD and go look for 3% on a 5 year (maybe more in the near future, maybe not).
Or a 2.25% with a low EWP. Then put 10-15% in equities. If markets do well, they will get a boost; if they don't the interest should cover most of the losses. Now that the market has almost 6 up years (though possibly not this year); all of sudden they want to invest.
This is very conservative, but has little downside risk and will certainly better than what they have.

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Re: Am I wrong?

Post by Call_Me_Op » Wed Aug 05, 2015 7:32 am

Uncle Pennybags wrote:I would not get involved, if you make them money the at-a-boy will not be worth the disowning if the market crashes. They don't seem that interested; at least they don't invest in "no money down real estate.
I agree with Uncle Pennybags. My sister in law still holds a grudge against me for what happened in 2008-2009. The best approach is to steer relatives toward books that you believe espouse sound basic investing principles. If they do not understand the basics, they will not understand why they must incur occasional losses.

I do advise my mom because of her age and because she seems to accept that stock values fluctuate.
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Kosmo
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Re: Am I wrong?

Post by Kosmo » Wed Aug 05, 2015 1:13 pm

You are definitely not wrong. They asked for advice and you gave it. Their inability to execute simple instructions ("Call Vanguard") shows me they really have no interest in making changes.

ResearchMed
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Re: Am I wrong?

Post by ResearchMed » Wed Aug 05, 2015 1:39 pm

Kosmo wrote:You are definitely not wrong. They asked for advice and you gave it. Their inability to execute simple instructions ("Call Vanguard") shows me they really have no interest in making changes.
This ^

Vanguard WILL "do it for them", with online orders for mutual fund purchases, to the best of my knowledge.
For some things (or perhaps with some minimum balances), there might be a very modest fee for the phone rep to do it.

But your relatives will have to sign the forms themselves.
Vanguard will send that paperwork to them, and (if asked?) will even provide a FedEx label to return the signed docs.
They can pay a modest amount for an "advisor" at Vanguard, and they'll still do better than getting snagged by MegaBroker.

Once you've given them the phone number and maybe a written/emailed list of a few questions to ask, your job seems to be done.
Vanguard has lots of experience helping people "get started".

RM
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David Jay
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Re: Am I wrong?

Post by David Jay » Wed Aug 05, 2015 1:49 pm

I agree with RM, the .3% Vanguard Advisor may be the route. They can turn it over to Vanguard and Vanguard will do everything.

And if they get more interested in the future, they can move to a self-directed account.
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Mill
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Re: Am I wrong? [to assist family members with finances]

Post by Mill » Wed Aug 05, 2015 9:07 pm

Are you wrong?
I told him exactly what funds to invest in
I don't know.

How can you possibly know exactly what funds to invest in?

:beer

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Uncle Pennybags
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Re: Am I wrong? [to assist family members with finances]

Post by Uncle Pennybags » Thu Aug 06, 2015 1:42 am

Mill wrote:How can you possibly know exactly what funds to invest in?
The OP said he reads the forum. The basic three fund portfolio.

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Makaveli
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Re: Am I wrong? [to assist family members with finances]

Post by Makaveli » Thu Aug 06, 2015 6:27 am

I worked with my parents and posted their situation here on Bogleheads. Once they saw the feedback (and how it matched with my recommendation) they jumped into action.

My other sibling took a gamble on penny stocks at a young age. Nothing came to be. He is uber aggressive. I sent him "If You Can" by W. Bernstein and he bought several books. Several months later we sat down at my place and I logged onto Vanguard (after he created the account) and I personally showed him how to buy mutual funds, how to calculate the % he wanted for each asset class, etc. We got to the final screen for purchase and I made him click the button. After the 1st example (US Total), he did the following Total International and Total Bond purchases from start to finish.

Figure out what makes each person tick.

ljb1234
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Re: Am I wrong?

Post by ljb1234 » Thu Aug 06, 2015 6:29 am

22twain wrote:Just tell them, "if grandma can do it, so can you!" :P
Agreed!

Nice quote. :happy

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gasdoc
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Re: Am I wrong? [to assist family members with finances]

Post by gasdoc » Thu Aug 06, 2015 8:16 am

My Mom, an older lady who is financially illiterate, was doing real stupid stuff financially because she didn't know any better. I went over, by phone, the Vanguard target retirement and Lifestyle funds that seemed appropriate for her. She chose the one she liked. I gave her the name of the fund and the fund number, and instructions to leave it alone except to take out what she needs every year. I gave her Vanguard's number. From there, she called Vanguard and the Vanguard rep took it from there, mailing her the forms for signatures. She asked me a couple of questions she had while filling out the forms. She now is appropriately invested and confident that she can "invest."

gasdoc

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FrugalInvestor
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Re: Am I wrong? [to assist family members with finances]

Post by FrugalInvestor » Thu Aug 06, 2015 8:25 am

You've handled the situation correctly. If you mother and brother are blaming you for what you're not doing they are certainly going to blame you for what you did if the outcome is not to their liking - and as we know, investments do not go up in a straight line. I'd just tell them that you've done all you can do.
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Re: Am I wrong? [to assist family members with finances]

Post by Fallible » Thu Aug 06, 2015 12:01 pm

This reminds me of the saying, "Give a man a fish and you feed him for a day. Teach a man to fish and you feed him for a lifetime." It's a little open to interpretation in this case,, but I think you come down more on the side of teaching. After all, they now only have to execute what you've taught by calling VG.

There's another saying: "The ball's in their court."
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Watty
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Re: Am I wrong? [to assist family members with finances]

Post by Watty » Thu Aug 06, 2015 12:15 pm

sawhorse wrote:I'd stick to recommending target date funds for them. Forget about all the asset allocation research you've done. They're clearly not interested. Target date funds also can serve to deflect blame because you can blame it on the target date manager for choosing an improper allocation.
+1

For retirement accounts that isn't just dodging the question, it is a good choice.

You could also buy them a copy of the Bogleheads Guide to Investing to help them understand why that is a good choice.

It isn't just because of the family dynamics, but you could get run over by the perverbial Mack truck tomorrow and they would not know what to do without you.
Last edited by Watty on Thu Aug 06, 2015 1:24 pm, edited 1 time in total.

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FelixTheCat
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Re: Am I wrong? [to assist family members with finances]

Post by FelixTheCat » Thu Aug 06, 2015 12:25 pm

Mom and brother can call Vanguard Personal Advisor Services.
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WallyBird
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Re: Am I wrong? [to assist family members with finances]

Post by WallyBird » Thu Aug 06, 2015 3:08 pm

Goal33 wrote:Am I wrong to not literally hand hold them through the entire process and do it for them? I think this is basic stuff and if you know what funds you need to buy, you should be the one clicking it... especially if we're talking 100k+ for both of them.
No, you're not wrong at all.

Tell Mom to call Vanguard PAS and maybe offer to assist her in finding some CDs.

Give your brother a copy of Bill Bernstein's "If You Can" and Vanguard's phone number. If he wants to take it any further, he'll have all the tools he needs.

Do any of you have similar experiences with family and finance?
No, I've got a brother who plays stocks like they were horses, and a number of relatives who are financial train wrecks. None of them ask me for advice.
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Rebecca_S
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Re: Am I wrong? [to assist family members with finances]

Post by Rebecca_S » Thu Aug 06, 2015 7:23 pm

After my father died, my mother was unsure about what to do with the investments he had always handled. I have an interest in investing and handle it for my household, and now I have taken over her investments, but this was the process I went through first.

1) We waited about a year to get over the biggest emotional hump. Nothing important happened to the investments during that year.

2) I had her to read The Coffeehouse Investor. It describes the basics of index funds, why low costs matter, why having a plan matters and why investing doesn't have to be too difficult; this book is written in a very accessible manner. Once she read it, she had a much better understanding of my investment philosophy. This book was also my husband's introduction to investing, while I handle the household investments he knows enough that I feel he could handle them if I was disabled/dead.

3) I came up with a conservative asset allocation and it explained it and my investment philosophy (low costs, index funds, occasional rebalancing) in a few emails. These emails were sent to both her and my sisters.

4) Both my sisters were OK with, and one specifically encouraged, using index funds in the conservative asset allocation I suggested. I wasn't going to do anything if either of them objected to my handling my mother's accounts.

5) My mother bought into the plan and transferred most of her investments to Vanguard. She did most of it over the phone, while I was on conference call in case there were any questions but I kept my mouth shut as much as possible. The Vanguard rep on the phone was very nice and walked her through everything. She wasn't too comfortable with computers but felt better about phone service.

6) I rebalance every year or 2, as needed, according to the plan.

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obgyn65
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Re: Am I wrong? [to assist family members with finances]

Post by obgyn65 » Fri Aug 07, 2015 5:03 am

To the OP: I would not get involved in this. I would not assist family members with finances.
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Ybsybs
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Re: Am I wrong? [to assist family members with finances]

Post by Ybsybs » Fri Aug 07, 2015 8:34 am

I assist family members and friends with finances. At first it was just telling a sibling after he got his first job that starting an IRA was a good idea. (He did.) Later on I got a reputation as a person who knows about investing. I get questions a lot about what I invest in and why. (Thankfully no asks how much I have. That could get awkward.)

I did spend a day talking with a friend and her new spouse about financial planning and then talk them through setting up their 401ks and IRAs. (They asked for this well before the wedding, and I was somewhat stunned to have my advice valued so highly. There were some insurance broker friends of the parents who they were being pressured to listen to. Their gut instincts were telling them something was off, but they needed help identifying what to do instead.)

I don't do the button mashing for anyone though, and I do make sure to emphasize a lot that the stock market does sometimes go down, and that when it does, I don't want it to take our relationship with it.

core4portfolio
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Re: Am I wrong? [to assist family members with finances]

Post by core4portfolio » Fri Aug 07, 2015 10:06 am

Ask them to come online. Use Skype for screen sharing...

Guide them slowly step by step how to do on vanguard site over the week end.
Sometime people are afraid of doing very small thing due to fear of messing up ....
I saw many people who dont know how to turn on a laptop.... so we call them as 5th level user.

I hope they understood the risk of investment
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Goal33
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Re: Am I wrong? [to assist family members with finances]

Post by Goal33 » Thu Aug 20, 2015 11:32 pm

Thank you all for the feedback! I feel better about how I am going to handle this situation going forward now
A man with one watch always knows what time it is; a man with two watches is never sure.

Dulocracy
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Re: Am I wrong? [to assist family members with finances]

Post by Dulocracy » Fri Aug 21, 2015 8:49 am

Goal33 wrote:Thank you all for the feedback! I feel better about how I am going to handle this situation going forward now

Great advice on here. How I would handle it in the way of telling them:

I am not an adviser, so I am not legally allowed to do it for you.
I'm not a financial professional. Post is info only & not legal advice. No attorney-client relationship exists with reader. Scrutinize my ideas as if you spoke with a guy at a bar. I may be wrong.

Tamales
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Re: Am I wrong? [to assist family members with finances]

Post by Tamales » Fri Aug 21, 2015 8:56 am

There may be a "pay me now or pay me later" aspect to this that you aren't considering. This would be specific to your mom, but not siblings.

If your mom outlives her money, you may be called on to support her living expenses.** Longer term, it may be worth your while to take over her account (after proper paperwork), and invest in a simple B&H portfolio. At this point it would come down to whatever portfolio you are comfortable with, because you (and other siblings if applicable) would be on the hook to cover her shortfall. So in other words you might as well invest it according to the plan you think gives the best chance of not needing financial support from your own accounts.

**whether you want to is up to you.

PS, "repetition" helps with people not familiar with markets. You have to break them of their financial news network-induced belief that there is some trick, or level of smartness, to beating markets. Repeat it over and over, that no one can do it consistently (give them some Warren Buffet quotes or whatever you think will help), and eventually they can be broken of their belief. Deep down, I think nearly everyone understands this, and that's why they eventually come around. You aren't trying to get them to change a core belief, you're instead trying to erase all the nonsense that has been packed into their heads and is obscuring their basic acceptance that people can't predict the future.

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