Advising a friend

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airahcaz
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Advising a friend

Post by airahcaz »

Let’s say someone is coming into some money from a lawsuit and wants to start investing, fund 529’s etc., but doesn’t know anything, and also trusts no one but one of his friends; however, that friend is not an FA. Here’s the wrinkle, he wants to offer either annual fees or a % of gains for the advice. How can this be arranged? Say Fidelity is used, then the other person manages the portfolio and any agreed fee paid separately? Any other suggestions?
1) Invest you must 2) Time is your friend 3) Impulse is your enemy 4) Basic arithmetic works 5) Stick to simplicity 6) Stay the course. (Plagiarized, but worth stealing)
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CAsage
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Re: Advising a friend

Post by CAsage »

Don't touch any part of this with a 10 foot pole. The opportunity here to destroy that relationship or to be defrauded are .... scary. "Someone" who doesn't trust anyone should at least learn a little bit about investing (low fees, index, diversify). The no-think solution is a Target Date retirement fund ... but paying some "friend" to manage things for you will destroy that relationship quickly. Maybe the best solution is for the "Friend" to educate "Someone" a bit about the basics over a nice dinner, but getting paid for this might not be ... ethical? Legal if not licensed? Just thinking here.
Last edited by CAsage on Sun May 17, 2020 1:19 pm, edited 1 time in total.
Salvia Clevelandii "Winifred Gilman" my favorite. YMMV; not a professional advisor.
02nz
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Re: Advising a friend

Post by 02nz »

CAsage wrote: Sun May 17, 2020 1:17 pm Don't touch any part of this with a 10 foot pole. The opportunity here to destroy that relationship or to be defrauded are .... scary. "Someone" who doesn't trust anyone should at least learn a little bit about investing (low fees, index, diversify). The no-think solution is a Target Date retirement fund ... but paying some "friend" to manage things for you will destroy that relationship quickly.
I also think it's a bad idea ... but my read was that OP would be the "friend" doing the advising. Still, a bad idea.
Katietsu
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Re: Advising a friend

Post by Katietsu »

I think the wrinkle here is that the friend would be doing something illegal. To be paid to manage investments you must be registered and follow a heavy set of regulations.
Ferdinand2014
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Re: Advising a friend

Post by Ferdinand2014 »

Terrible idea. Run don’t walk.
“You only find out who is swimming naked when the tide goes out.“ — Warren Buffett
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celia
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Re: Advising a friend

Post by celia »

I would advise this friend to read Bogleheads.org and post a specific question there, if needed. Teach her how to learn and research and how she can invest those fees so she can be knowledgeable and have more assets.
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Sandtrap
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Re: Advising a friend

Post by Sandtrap »

airahcaz wrote: Sun May 17, 2020 12:41 pm Let’s say someone is coming into some money from a lawsuit and wants to start investing, fund 529’s etc., but doesn’t know anything, and also trusts no one but one of his friends; however, that friend is not an FA. Here’s the wrinkle, he wants to offer either annual fees or a % of gains for the advice. How can this be arranged? Say Fidelity is used, then the other person manages the portfolio and any agreed fee paid separately? Any other suggestions?
First
Refer the friend to this website: "bogleheads.org" (even browsing would be an eye opener).
Second
Email the friend a link to the forum wiki (getting started). . .
Third
Explain to friend how to ask questions or refer to the link here on how to do that, register, etc.
Fourth
Repeat #1-3

*Leave money out of friendship. Keep it simple.

j :happy
Last edited by Sandtrap on Mon May 18, 2020 8:16 am, edited 1 time in total.
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pkcrafter
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Re: Advising a friend

Post by pkcrafter »

Does this "friend" have any kind of credential, experience, background, anything to justify payment?

Beyound that, it's a bad idea to invest with a friend, period. Anybody will be your best friend if you pay them!


Paul
When times are good, investors tend to forget about risk and focus on opportunity. When times are bad, investors tend to forget about opportunity and focus on risk.
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