Someone wants to pay me to manage their finances

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Planner
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Someone wants to pay me to manage their finances

Post by Planner » Tue Aug 16, 2016 1:14 pm

I don't really like the financial services industry. But an acquaintance wants to pay me to manage their finances. I'd prefer that they manage their own money, and have told them that. They don't want to do that, though. I told them I have no certifications, but they know I know enough (in large part because of this forum), and they now understand how much their current financial advisor is charging them. I even told them if I did this, it would be temporary to help them straighten things out, and I'd teach them to do it themselves.

I'm wondering what the Boglehead community thinks of this. Have you ever been in this situation before? If so, what did you do? Problems? Successes? What is the process, anyways? Should I just get an EIN for myself and report it on my taxes as self-employment income? Maybe I'll open an individual Roth 401k at Vanguard (I'm young). Do I need to go get some kind of financial advisor certification?

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Re: Someone wants to pay me to manage their finances

Post by inbox788 » Tue Aug 16, 2016 1:22 pm

AUM? :happy

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FelixTheCat
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Re: Someone wants to pay me to manage their finances

Post by FelixTheCat » Tue Aug 16, 2016 1:25 pm

I would refer them to Vanguard's Personal Advisory Services.
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Re: Someone wants to pay me to manage their finances

Post by barnaclebob » Tue Aug 16, 2016 1:26 pm

Regardless of any certifications or tax hoops to jump through, the potential headaches this could cause are surely not worth what they would be willing to pay an acquaintence or friend.

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BL
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Re: Someone wants to pay me to manage their finances

Post by BL » Tue Aug 16, 2016 1:29 pm

I wouldn't touch it, but might suggest Vanguard PAS or even to do the Asking Questions here to get advice which they would still need to do something with.

Are you prepared to handle the blame when things go bad, perhaps having nothing to do with your advice? I don't know about the legal consequences; also your specific state may have requirements for some certification as well.

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Re: Someone wants to pay me to manage their finances

Post by Planner » Tue Aug 16, 2016 1:35 pm

Ah, that's a good idea. Vanguard's Personal Advisory Services. I'll float that towards them and see if they're interested. If they're not, hopefully someone has some thoughts on what states sometimes require (or where I would even look for that information). Or if I should have them sign something that says that I'm not liable for downturns in the market or whatever.

Honestly, I'd do this nearly for free. I don't need the money. I already help a lot of people for free, but not to this extent. And they were pretty insistent on getting a new financial advisor they would pay -- I was the first choice, apparently, though PAS may be their best option.

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Re: Someone wants to pay me to manage their finances

Post by staythecourse » Tue Aug 16, 2016 1:36 pm

I would be curious to see how much they would care about your lack of experience or certifications when the next 2008 rolls around.

The liability and/ or headaches are just not worth it. Just tell them you are not qualified to manage money professional (which you aren't) and direct them to Vanguard. They will offer the same advice and can actually do the hand holding of transferring money this way or that way.

Good luck.
"The stock market [fluctuation], therefore, is noise. A giant distraction from the business of investing.” | -Jack Bogle

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Re: Someone wants to pay me to manage their finances

Post by mptfan » Tue Aug 16, 2016 1:43 pm

staythecourse wrote:I would be curious to see how much they would care about your lack of experience or certifications when the next 2008 rolls around.
Agreed. It's easy to be sanguine when the market keeps going up, but attitudes change when the stuff hits the fan.

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Re: Someone wants to pay me to manage their finances

Post by oldcomputerguy » Tue Aug 16, 2016 1:44 pm

BL wrote:I wouldn't touch it, but might suggest Vanguard PAS or even to do the Asking Questions here to get advice which they would still need to do something with.

Are you prepared to handle the blame when things go bad, perhaps having nothing to do with your advice? I don't know about the legal consequences; also your specific state may have requirements for some certification as well.
+1. Too much liability. You'll get blamed when (not if) the next market downturn happens.
"I’ve come around to this: If you’re dumb, surround yourself with smart people; and if you’re smart, surround yourself with smart people who disagree with you." (Aaron Sorkin)

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Re: Someone wants to pay me to manage their finances

Post by Call_Me_Op » Tue Aug 16, 2016 1:48 pm

smartinwate wrote: +1. Too much liability. You'll get blamed when (not if) the next market downturn happens.
+2. You'll be surprised how fast friendship will vanish when you are blamed for losing your friend's money (even though the loss might be due to typical market fluctuations).
Last edited by Call_Me_Op on Tue Aug 16, 2016 1:49 pm, edited 1 time in total.
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Taylor Larimore
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Re: Someone wants to pay me to manage their finances

Post by Taylor Larimore » Tue Aug 16, 2016 1:48 pm

I'm wondering what the Boglehead community thinks of this.
Planner:

I frequently get asked to manage another person's portfolio. I have learned it is nearly always a mistake:

* You are not a full-time professional and your recommendations could easily contain a mistake or overlook a desired action. Are you fully versed in taxes, various retirement-plans, fund placement, tax-loss harvesting, etc.?

* Whatever you recommend, others will know better(?) and disagree.

* Your recommended portfolio will have periods of underperfomance. You will be blamed.

* You will worry more about the performance of your recommended portfolio than your own.

I like BL's idea: "Suggest Vanguard PAS (Personal Advisor Service).

Another suggestion is to give your friend a good book about investing. I like Mr. Bogle's Little Book of Common Sense Investing for someone who is unlikely to spend much time learning. Investing with simplicity in index funds is not intuitive. A good book will explain better than you or I can.

Best wishes
Taylor
"Simplicity is the master key to financial success." -- Jack Bogle

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Re: Someone wants to pay me to manage their finances

Post by cfs » Tue Aug 16, 2016 2:04 pm

Avoid
Avoid
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Re: Someone wants to pay me to manage their finances

Post by boglephreak » Tue Aug 16, 2016 2:09 pm

Nope.

in a bull, you will feel bad taking their money because its actually pretty easy with a bogelhead approach. in a bear, you will feel bad when they make you feel bad after they question everything and you have taken responsibility for their losses.

i would suggest just teaching them the basics; its not that hard (ignore slice/dice, ignore TLH, just do a target fund or simple two-fund portfolio). or, direct them to Vanguard's advisors who will just do a target fund for them, but will get the call in the next bear.

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Re: Someone wants to pay me to manage their finances

Post by staythecourse » Tue Aug 16, 2016 2:11 pm

Taylor Larimore wrote:Another suggestion is to give your friend a good book about investing. I like Mr. Bogle's Little Book of Common Sense Investing for someone who is unlikely to spend much time learning. Investing with simplicity in index funds is not intuitive. A good book will explain better than you or I can.
Agreed.

Mr. Bogle's addition to the Little Book series and Mr. Roth's, "How a second grader beat wall street" are two of the BEST simple, articulate, and to the point books to introduce folks to personal investing. Heck, what I learned in those two books (which can be read in a weekend) is responsible for about 80% of the knowledge I currently have.

Always better to teach the person how to fish then give them a fish... Or something like that. :D

Good luck.
"The stock market [fluctuation], therefore, is noise. A giant distraction from the business of investing.” | -Jack Bogle

sesq
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Re: Someone wants to pay me to manage their finances

Post by sesq » Tue Aug 16, 2016 2:18 pm

From time to time I suggest or even help people get their assets into a target date retirement fund.

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Taylor Larimore
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Target or 3-Fund Portfolio?

Post by Taylor Larimore » Tue Aug 16, 2016 2:36 pm

sesq wrote:From time to time I suggest or even help people get their assets into a target date retirement fund.
sesq:

I agree if the portfolio is entirely tax-advantaged; otherwise, The Three-Fund Portfolio may be more tax-efficient.

Best wishes.
Taylor
"Simplicity is the master key to financial success." -- Jack Bogle

capgain
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Re: Someone wants to pay me to manage their finances

Post by capgain » Tue Aug 16, 2016 2:46 pm

Also, you don't want to trigger any state (or federal, although very unlikely) registration requirements because you are being compensated for giving advice on purchasing/holding/selling securities.

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Re: Someone wants to pay me to manage their finances

Post by delamer » Tue Aug 16, 2016 2:54 pm

capgain wrote:Also, you don't want to trigger any state (or federal, although very unlikely) registration requirements because you are being compensated for giving advice on purchasing/holding/selling securities.
Yes - aside from any issues of your friend blaming you for underperformance, I would be very concerned about legal exposure. I'd tell him that; "I can't do anything but give you informal suggestions. I could get in legal trouble otherwise."

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Taylor Larimore
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Re: Someone wants to pay me to manage their finances

Post by Taylor Larimore » Tue Aug 16, 2016 3:27 pm

Planner:

While preparing a Reply, I came across this Investopedia article:

Investing For Friends

Best wishes.
Taylor
"Simplicity is the master key to financial success." -- Jack Bogle

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Re: Someone wants to pay me to manage their finances

Post by RNJ » Tue Aug 16, 2016 3:31 pm

No way. Dangerous for all concerned. Vanguard PAS if they have neither the time nor inclination to manage for themselves.

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Re: Someone wants to pay me to manage their finances

Post by Bfwolf » Tue Aug 16, 2016 3:39 pm

It's illegal for you to provide specific investment advice for money without getting licensed.

https://www.kitces.com/blog/are-the-lic ... -too-easy/

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Re: Someone wants to pay me to manage their finances

Post by mptfan » Tue Aug 16, 2016 3:42 pm

Bfwolf wrote:It's illegal for you to provide specific investment advice for money without getting licensed.

https://www.kitces.com/blog/are-the-lic ... -too-easy/
Yes, but "advisors who wish to get paid a fee for their general advice can do so without being registered or regulated at all in most states."

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Re: Someone wants to pay me to manage their finances

Post by nedsaid » Tue Aug 16, 2016 3:42 pm

Planner wrote:I don't really like the financial services industry. But an acquaintance wants to pay me to manage their finances. I'd prefer that they manage their own money, and have told them that. They don't want to do that, though. I told them I have no certifications, but they know I know enough (in large part because of this forum), and they now understand how much their current financial advisor is charging them. I even told them if I did this, it would be temporary to help them straighten things out, and I'd teach them to do it themselves.

I'm wondering what the Boglehead community thinks of this. Have you ever been in this situation before? If so, what did you do? Problems? Successes? What is the process, anyways? Should I just get an EIN for myself and report it on my taxes as self-employment income? Maybe I'll open an individual Roth 401k at Vanguard (I'm young). Do I need to go get some kind of financial advisor certification?
What I would do is sit down with the person and review their financial situation. I would do my best to educate them and maybe offer a few suggestions but I would not take responsibility for their affairs. There is a liability issue and you could lose a friend if something went wrong. The suggestion to send your friend to Vanguard Advisory Services is a great one.

If this was an elderly parent, that is a different matter. But even then, much caution is warranted.
A fool and his money are good for business.

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Re: Someone wants to pay me to manage their finances

Post by GoldenFinch » Tue Aug 16, 2016 3:49 pm

FelixTheCat wrote:I would refer them to Vanguard's Personal Advisory Services.
I agree with The Cat.

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Re: Someone wants to pay me to manage their finances

Post by jf89 » Tue Aug 16, 2016 4:12 pm

BL wrote:Are you prepared to handle the blame when things go bad, perhaps having nothing to do with your advice?
This quote right here was the biggest headache I ran into in helping a coworker. We got an email about a fund change in our 401k, someone saw me reading the prospectus and asked what the change was... ten minutes later, after he and a couple others realized I somewhat knew what this stuff meant, I'm referring them all to this forum. One coworker had no interest and said "You said this is the best fund in our 401k and the only one any of us should own, right?" Before I could point out that he was ignoring the part where I own other funds in other accounts and look at them all as one big portfolio, he had transferred all of his 401k to that one fund (S&P 500 index... only fund we had with a reasonable ER). No amount of explanation about the theory behind choosing that fund or how he should balance it by opening an IRA or taking a look at his options in his wife's 401k made him think he should do anything else... nor did my insistence that he did what others did by coming to the wiki here. A month later he's yelling at me that his old fund had outperformed in the last month, and he had sold out of the index fund back into the 1+% ER retirement date fund they offered. I said okay and will now frame my advice differently in the future.

I say all that to show you that it is better to teach and direct your friends to resources like the wiki and this forum than to do it for them. They'll still have access to their accounts, and will likely check it more often since it is now top-of-mind. The worst thing that could happen (which you cannot predict) is for them to react to a bad day in the market by selling everything.

Well... I guess the worst thing that could happen is that they sue you for losing their money and you're held liable, because you're working without any license or experience as a paid financial advisor.
"Save as much as you can, diversify diversify diversify, and you can't go wrong with tech stocks" | -First investing advice I recall from my parents in the 90's (two outta three ain't bad)

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Re: Someone wants to pay me to manage their finances

Post by Toons » Tue Aug 16, 2016 4:28 pm

Pass On The Idea
:happy
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Re: Someone wants to pay me to manage their finances

Post by DetroitRick » Tue Aug 16, 2016 4:54 pm

I've done this, twice. I have handled my in-laws investments since 2007 (through the crisis) and those of my closest friend since 2011. I just terminated working with my friend last month. I will continue with my mother-in-law as long as she lives.

It's gone fine with both parties, but it was A LOT OF WORK, especially up front. I undertook this for my best friend because he was in dire straights, poorly served by his advisor, and because we had the type of relationship that would survive the process. We worked together (vendor/customer) for years first. I doubt I would ever consider this for anyone else. In the case of in-laws, they were so badly taken advantage of and wanted help so badly that I couldn't refuse. No regrets on my part or theirs. Compensation was very indirect, and very trivial. I understand the laws and regulations, but don't care because of the exact circumstances at hand. I carry an FPOA with Schwab for my in-laws, but did not for my friend. In the real world, formal compensation requires licensing, period.

The biggest challenge in doing this has been the lack of interest and limited financial attention span when designing the portfolios for both parties. This is a common characteristic of people that want to "turn their finances over" to somebody. And I believe this is the biggest hurdle. One other thing to watch for - a lot of people say they "want financial help", but what they really want is "hot tips on the latest big thing". This is the first thing I dispensed with in my dealings. But both parties in my case still wished to continue.

You could just see eyes glaze when I undertook the initial discussions regarding risk vs. return and situation-appropriate asset allocation, etc. In the case of my in-laws, the process started with their being sure their former advisor was stealing. By the time I put enough history together to prove otherwise (he was just greasy and incompetent, but not a thief), I was 50% there. Then it took endless conversations to focus in strategy and needs. But it survived the crash and (my father-in-law has since passed) my mother-in-law is extremely happy.

In dealing with my friend, only two problems really occurred. First, I found myself constantly arguing against hare-brained schemes - major positions in gold and commodites (he wanted 20%, we settled on 6%), chasing returns in the worst way, placing no value on portfolio simplicity and an unwillingness to hold cash in IRA's with decent RMD's (I finally won that argument last year). These were all easy for me to deal with because we can (and still do) communicate with no BS and complete honesty. I don't think I could have handled it with anyone else. The second problem, and the one that made me stop this process last month, related to marriage, recent evidence of senility with the new wife (I managed their combined assets) and a jag of irrational major spending from both that would lead to major portfolio liquidation.

I left him with a great portfolio, advice for the next phase, and friendship intact. Again, with anyone else it would have been a big deal.

By the way, all portfolios that are covered by this diatribe were fairly simply. Not exact Boglehead, but Boglehead-ish. Including lots of indexing and nearly all low-cost funds.

To sum up, think twice, think three times. CAREFULLY weigh the compensation vs. licensing issue. Think through your friendship, the ups and downs of the market, and whether it is all worth it. For me it was, not because of money in my pocket, but because I got to improve a couple of loved ones financial lives. Would I do this for anyone else? Doubtful. Would I do it again for these folks? Absolutely.

Best of luck.

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Re: Someone wants to pay me to manage their finances

Post by Makaveli » Tue Aug 16, 2016 5:09 pm

DetroitRick wrote:I've done this, twice. I have handled my in-laws investments since 2007 (through the crisis) and those of my closest friend since 2011. I just terminated working with my friend last month. I will continue with my mother-in-law as long as she lives.

It's gone fine with both parties, but it was A LOT OF WORK, especially up front. I undertook this for my best friend because he was in dire straights, poorly served by his advisor, and because we had the type of relationship that would survive the process. We worked together (vendor/customer) for years first. I doubt I would ever consider this for anyone else. In the case of in-laws, they were so badly taken advantage of and wanted help so badly that I couldn't refuse. No regrets on my part or theirs. Compensation was very indirect, and very trivial. I understand the laws and regulations, but don't care because of the exact circumstances at hand. I carry an FPOA with Schwab for my in-laws, but did not for my friend. In the real world, formal compensation requires licensing, period.

The biggest challenge in doing this has been the lack of interest and limited financial attention span when designing the portfolios for both parties. This is a common characteristic of people that want to "turn their finances over" to somebody. And I believe this is the biggest hurdle. One other thing to watch for - a lot of people say they "want financial help", but what they really want is "hot tips on the latest big thing". This is the first thing I dispensed with in my dealings. But both parties in my case still wished to continue.

You could just see eyes glaze when I undertook the initial discussions regarding risk vs. return and situation-appropriate asset allocation, etc. In the case of my in-laws, the process started with their being sure their former advisor was stealing. By the time I put enough history together to prove otherwise (he was just greasy and incompetent, but not a thief), I was 50% there. Then it took endless conversations to focus in strategy and needs. But it survived the crash and (my father-in-law has since passed) my mother-in-law is extremely happy.

In dealing with my friend, only two problems really occurred. First, I found myself constantly arguing against hare-brained schemes - major positions in gold and commodites (he wanted 20%, we settled on 6%), chasing returns in the worst way, placing no value on portfolio simplicity and an unwillingness to hold cash in IRA's with decent RMD's (I finally won that argument last year). These were all easy for me to deal with because we can (and still do) communicate with no BS and complete honesty. I don't think I could have handled it with anyone else. The second problem, and the one that made me stop this process last month, related to marriage, recent evidence of senility with the new wife (I managed their combined assets) and a jag of irrational major spending from both that would lead to major portfolio liquidation.

I left him with a great portfolio, advice for the next phase, and friendship intact. Again, with anyone else it would have been a big deal.

By the way, all portfolios that are covered by this diatribe were fairly simply. Not exact Boglehead, but Boglehead-ish. Including lots of indexing and nearly all low-cost funds.

To sum up, think twice, think three times. CAREFULLY weigh the compensation vs. licensing issue. Think through your friendship, the ups and downs of the market, and whether it is all worth it. For me it was, not because of money in my pocket, but because I got to improve a couple of loved ones financial lives. Would I do this for anyone else? Doubtful. Would I do it again for these folks? Absolutely.

Best of luck.
:idea:

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Makaveli
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Re: Someone wants to pay me to manage their finances

Post by Makaveli » Tue Aug 16, 2016 5:12 pm

I am working with a few individuals/families right now but only in the sense of creating an IPS and setting up their initial investments. I'll generate a customized excel tracker which lights up green/red for re-balancing purposes. When asked what I wanted in return I said nothing. It was nice helping them get a start. Of course, this went along with the list of recommended books that should carry them the rest of their way.

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Re: Someone wants to pay me to manage their finances

Post by LarryAllen » Tue Aug 16, 2016 5:18 pm

Run. away. fast!

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Re: Someone wants to pay me to manage their finances

Post by nedsaid » Tue Aug 16, 2016 5:21 pm

jf89 wrote:
BL wrote:Are you prepared to handle the blame when things go bad, perhaps having nothing to do with your advice?
This quote right here was the biggest headache I ran into in helping a coworker. We got an email about a fund change in our 401k, someone saw me reading the prospectus and asked what the change was... ten minutes later, after he and a couple others realized I somewhat knew what this stuff meant, I'm referring them all to this forum. One coworker had no interest and said "You said this is the best fund in our 401k and the only one any of us should own, right?" Before I could point out that he was ignoring the part where I own other funds in other accounts and look at them all as one big portfolio, he had transferred all of his 401k to that one fund (S&P 500 index... only fund we had with a reasonable ER). No amount of explanation about the theory behind choosing that fund or how he should balance it by opening an IRA or taking a look at his options in his wife's 401k made him think he should do anything else... nor did my insistence that he did what others did by coming to the wiki here. A month later he's yelling at me that his old fund had outperformed in the last month, and he had sold out of the index fund back into the 1+% ER retirement date fund they offered. I said okay and will now frame my advice differently in the future.

I say all that to show you that it is better to teach and direct your friends to resources like the wiki and this forum than to do it for them. They'll still have access to their accounts, and will likely check it more often since it is now top-of-mind. The worst thing that could happen (which you cannot predict) is for them to react to a bad day in the market by selling everything.

Well... I guess the worst thing that could happen is that they sue you for losing their money and you're held liable, because you're working without any license or experience as a paid financial advisor.
The problem is that people will hear what they want to hear. You just cannot explain this in snippets or sound bites. Attention spans get shorter and shorter.

What your co-worker heard was "blah, blah, blah, the S&P 500 is the best fund, blah, blah, blah." No matter how patiently you explained about asset allocation and diversification, it just fell on deaf ears.

This is why giving advice is so treacherous. Only part of what you say is heard.
A fool and his money are good for business.

lemonPepper
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Re: Someone wants to pay me to manage their finances

Post by lemonPepper » Tue Aug 16, 2016 5:48 pm

You are taking the risk of getting blamed for no compensation. There is no right or wrong answer with investing. So in BH philosophy, I would not do it. It's not like a restaurant recommendation or helping someone with their computer.

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Re: Someone wants to pay me to manage their finances

Post by cheesepep » Tue Aug 16, 2016 6:06 pm

I would do it. Just need login name and password.

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Re: Someone wants to pay me to manage their finances

Post by pondering » Tue Aug 16, 2016 6:10 pm

Are you comfortable with robo advisors?
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Re: Someone wants to pay me to manage their finances

Post by Teague » Tue Aug 16, 2016 6:30 pm

Planner wrote: Honestly, I'd do this nearly for free.
I think you would be playing with fire, or maybe dynamite. With the fuse lit.

If you do this, (and I suggest you do no such thing) then do it for free. Or alternatively get the required certifications, get yourself licensed and insured for this sort of business, and charge a proper professional fee.

Entering a business, particularly of this sort, and charging next to nothing would be the worst of both worlds, I believe.
Semper Augustus

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Watty
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Re: Someone wants to pay me to manage their finances

Post by Watty » Tue Aug 16, 2016 7:18 pm

One thing that I have not seen mentioned is that I would assume that most real financial advisers have "errors and omissions insurance" to cover lawsuits if they get sued for their advice. In addition to possibly losing a lawsuit you could be facing huge legal bills to defend yourself.

You would also want to have a lawyer write up an agreement before you started and that that would also add to the legal fees.

Even if you are comfortable that the person will be OK with your choices no matter what you, or your estate, could also be sued by who ever inherits their money some day or by their spouse if they got divorced.

In addition to all the other problems already mentioned it would also be a poor choice for your acquaintance.

A huge problem is that if something happens to like you like getting hit by the proverbial Mack Truck then the person would be lost and could then end up going to a very bad high cost advisor to replace you.

If you do something like go on an extended vacation or end up in a hospital and they had an emergency or end of year dateline come up when you are unavailable then that could be a problem too.

If you wanted to, a reasonable compromise might be to offer to help the person find and get started with an advisor like Vanguard(like was mentioned) and to "coach" them through the process to hold their hand and help them figure out the right questions to ask. If you wanted to this could be done with a verbal understanding that they would make a modest donation to the charity of your choice.

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Re: Someone wants to pay me to manage their finances

Post by afan » Wed Aug 17, 2016 11:35 am

People have listed lots of reasons not to do this. I agree with all of them and note that only a few are relieved, at least as far a we nonlawyers believe, if you do it for free. We are assuming that doing for no compensation at all means you are not holding yourself out as a professional and potentially violating a series of laws and rules by not registering or getting licenses or approvals from some entity. Note it is not obvious that is true. As far as I know, again not a lawyer, doing it for free would not help a stock broker who had not complied with all the rules. It would not help if you sold insurance.

Since you plan to do this very part time and charge very low fee, it may not be worth it to hire a lawyer to advise you on what you can and cannot do, let alone draft the right documents.

All of this is equally true if your actual knowledge is outstanding. You may be highly qualified on that measure but lack the credentials.

Vanguard will manage the investments in a responsible manner at a price lower than most AUM managers. Your friend could.save more by going with some of the roboadvisoers.

If your friend needs help with the overall financial life then tell them to hire an advisor who charges an hourly rate as the only method of compensation.
We don't know how to beat the market on a risk-adjusted basis, and we don't know anyone that does know either | --Swedroe | We assume that markets are efficient, that prices are right | --Fama

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sperry8
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Re: Someone wants to pay me to manage their finances

Post by sperry8 » Wed Aug 17, 2016 11:45 am

I wouldn't take the money but would help them with my "non-professional advice". Once you accept fees they will "hold you responsible", if not legally at least morally. You are in a no-win situation in that case. But if you just offer free advice - they will understand you get what you pay for - and likely will push them to do more research and manage personally (but from a smarter starting point).
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Artsdoctor
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Re: Someone wants to pay me to manage their finances

Post by Artsdoctor » Wed Aug 17, 2016 12:00 pm

Anytime you accept money, you're essentially running a business. You will be responsible for your actions and you will be susceptible to liability. Why would you do this?

Agree with the above. Sit down, discuss goals, use something really focused and simple (the 3 Fund Portfolio will do), make a case for going with Vanguard (that shouldn't be too hard), help them fill out enrollment forms, and then turn them over to Vanguard.

You can be available for questions.

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Re: Someone wants to pay me to manage their finances

Post by Dottie57 » Wed Aug 17, 2016 12:06 pm

Planner wrote:Ah, that's a good idea. Vanguard's Personal Advisory Services. I'll float that towards them and see if they're interested. If they're not, hopefully someone has some thoughts on what states sometimes require (or where I would even look for that information). Or if I should have them sign something that says that I'm not liable for downturns in the market or whatever.

Honestly, I'd do this nearly for free. I don't need the money. I already help a lot of people for free, but not to this extent. And they were pretty insistent on getting a new financial advisor they would pay -- I was the first choice, apparently, though PAS may be their best option.
I would not touch with a 20 foot pole. Way too many problems.

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Re: Someone wants to pay me to manage their finances

Post by celia » Wed Aug 17, 2016 12:12 pm

I'm helping a friend transition into retirement using Vanguard and start Roth conversions. I calculated how much she could convert while staying in the same tax bracket each year but shy away from picking investments. She'll probably go with a Target Retirement fund. I wrote down the questions she needed to ask Vanguard and the custodians of her current 403b and 401k and she made the calls herself.

I would never take money from helping her or my relatives but do let them pay for my meal at a restaurant the next time we go out to eat.
A dollar in Roth is worth more than a dollar in a taxable account. A dollar in taxable is worth more than a dollar in a tax-deferred account.

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Re: Someone wants to pay me to manage their finances

Post by cpw84 » Wed Aug 17, 2016 3:13 pm

I've been known to put a physical copy of Bernstein's "If You Can" into the hands of friends. I just did this for a couple interns at my company because they said they hadn't thought much about investing and assumed it was very complicated. Just imagine the head start they could get at that age! It's almost become a personal mission to get the word out.

I feel that if someone isn't willing to put in the time to read up on their financial decisions, you shouldn't expect them to understand if your advice leads to short term losses. It's a lose-lose situation. Best to point them to an inexpensive advisor.

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Re: Someone wants to pay me to manage their finances

Post by meowcat » Thu Aug 18, 2016 7:48 am

I'm sorry, Johnny, I can't help you but I can tell you how I invest, and why. Call 1-800-Vanguard, they will help you.
More people should learn to tell their dollars where to go instead of asking them where they went. | -Roger Babson

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Planner
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Re: Someone wants to pay me to manage their finances

Post by Planner » Thu Aug 18, 2016 11:29 am

Thank you all for your responses. My plan is to recommend Vanguard's PAS, leave them a book recommendation, and explain why I believe this is what they should do. And, of course, I'll always be available if they want to discuss things.

Planner

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Re: Someone wants to pay me to manage their finances

Post by Lieutenant.Columbo » Fri Aug 19, 2016 6:05 am

celia wrote:I'm helping a friend transition into retirement using Vanguard and start Roth conversions. I calculated how much she could convert while staying in the same tax bracket each year...
Celia,

1. How does one learn IF and WHEN she should make Roth conversions?

2. will the converted funds come from Taxable and or from Deferred accounts?

thank you
Lt. Columbo: Well, what do you know. Here I am talking with some of the smartest people in the world, and I didn't even notice!

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celia
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Re: Someone wants to pay me to manage their finances

Post by celia » Fri Aug 19, 2016 11:30 am

JLMA wrote:
celia wrote:I'm helping a friend transition into retirement using Vanguard and start Roth conversions. I calculated how much she could convert while staying in the same tax bracket each year...
1. How does one learn IF and WHEN she should make Roth conversions?

2. will the converted funds come from Taxable and or from Deferred accounts?

thank you
1. Start by projecting your RMDs at age 70.5 (after taking tax-deferred account growth into account). What is the expected tax rate then after the RMDs are added to other expected income? Compare that tax rate to pre-SS tax rate. If tax rate is more after 70.5, convert before then. In other words, withdraw/convert when your tax rate is lowest. (Why pay more taxes than you need to?)

2. The only accounts that can be converted are tax-deferred. To keep as much money in Roths as possible, pay the tax using taxable money (instead withholdings from the conversion).
A dollar in Roth is worth more than a dollar in a taxable account. A dollar in taxable is worth more than a dollar in a tax-deferred account.

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StevieG72
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Re: Someone wants to pay me to manage their finances

Post by StevieG72 » Fri Aug 19, 2016 4:09 pm

FelixTheCat wrote:I would refer them to Vanguard's Personal Advisory Services.

Another vote for the Cat's wisdom.....
Fools think their own way is right, but the wise listen to others.

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