Do you ever wish you could help relatives improve their finances?

Non-investing personal finance issues including insurance, credit, real estate, taxes, employment and legal issues such as trusts and wills
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nimo956
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Do you ever wish you could help relatives improve their finances?

Post by nimo956 »

My aunt is in her 50s and works as nurse. She has worked very hard all her life, but is not the most financially savvy. I don't know the exact details of her finances, but I believe she is set up for a comfortable retirement with a paid off house and about $1m in assets.

I think her portfolio was at Merrill Lynch, or one of the investment brokerages that charge 1%-1.5% AUM. I thought this was likely inefficient, but she probably wouldn't feel comfortable or have an interest in managing it herself, so I did not say anything.

She married later in life, and met her husband about 9 years ago. He has grown children from a previous marriage that are already out of the house. I heard that one child who recently graduated from college took a job at an insurance company as a financial adviser. I felt a bit uneasy since I know that the "training" has you target friends and family first.

I expressed my concerns to my father, who is more comfortable discussing these topics with his sister, and he said he'd mention it to her. Sure enough though, a few weeks later, I hear about how everything is being moved out of the investment brokerage and to the new firm. Again, I don't know the details, but I can only imagine it consists of various annuity products with high fees and surrender charges. Who knows how much was triggered in capital gains taxes.

I'm sure there was pressure to help her son-in-law out in his new career, but I think it's very irresponsible for recent college graduates, who have never worked in their lives, to think that they are qualified to manage the life savings of someone nearing retirement with a few weeks training.

She may have some modest inheritances down the line that will help out, so I hope she is never in a desperate situation. Still, it angers me greatly that I can't just reach out and tell her what to do. The advice probably wouldn't be well-received.
Last edited by nimo956 on Mon Oct 28, 2019 2:57 pm, edited 2 times in total.
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bayview
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Re: Do you ever wish you could help relatives improve their finances?

Post by bayview »

You're right, it probably wouldn't be well-received.

The desire to help is very understandable, but the best you can do is IF asked for advice, perhaps say something along the lines of "I do my investing in things that I understand, which for me is a few broad-based indexes with low costs." Even then, it's highly unlikely that the relative or friend will change.

And of course, if they do take your advice, that will be right before Mr. Market has a fit, and their investments value goes (temporarily) down. it will recover, but they'll never forget "that loss I took because I followed your stupid advice."
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Goal33
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Re: Do you ever wish you could help relatives improve their finances?

Post by Goal33 »

yes, I wish to help but I find it only gets me in trouble. So, now I try to stay out of it
BogleMelon
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Re: Do you ever wish you could help relatives improve their finances?

Post by BogleMelon »

nimo956 wrote: Mon Oct 28, 2019 2:52 pm I don't think the advice would be well-received.
Then stay out of it. Unsolicited advice helps only the one who advises (by feeling he has done well) not the one he received it.

I am always very enthusiastic to speak about financial topics when asked. But I learned (the hard way) to only answer when asked. I learned that people would hate me, judge me, feel uncomfortable around me, if I initiated any financial topic (especially related to their financial situation) without they ask. I don't understand why they are so sensitive, but I understand to set my own boundaries before they do.
"One of the funny things about stock market, every time one is buying another is selling, and both think they are astute" - William Feather
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nimo956
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Re: Do you ever wish you could help relatives improve their finances?

Post by nimo956 »

What bothers me the most is that this isn't like falling prey to a used car salesman and overpaying on a car. That's a one-time mistake. You only get one shot at retirement. If you run out of money due to insufficient planning or excessive fees, there aren't really any remedies available to you in old age to rectify the situation.
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BogleMelon
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Re: Do you ever wish you could help relatives improve their finances?

Post by BogleMelon »

nimo956 wrote: Mon Oct 28, 2019 3:02 pm What bothers me the most is that this isn't like falling prey to a used car salesman and overpaying on a car. That's a one-time mistake. You only get one shot at retirement. If you run out of money due to insufficient planning or excessive fees, there aren't really any remedies available to you in old age to rectify the situation.
That's a one-time mistake
As an adult, she understands the same fact. She made a choice using her own money. She has full control over her money, and whom she trusts with her money. You don't have this privilege unless she asks. Yes, she may retire broke, but this is life: Natural Selection rules in all aspects, and finance is not exempted. On the good side, there are always government programs in the US so that poor people don't die of hunger or sickness because of the mistake they have done. (i.e Medicare).

What if you advised her to invest in index funds, and she listened and acted accordingly, then the market crashed? She won't get the fact that your advice has nothing to do with her diminished portfolio, she will think that she would be better had she stayed where she is right now. You would be blamed for the outcome.
"One of the funny things about stock market, every time one is buying another is selling, and both think they are astute" - William Feather
gmc4h232
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Re: Do you ever wish you could help relatives improve their finances?

Post by gmc4h232 »

Even if you did give her advice, why would she trust your advice over that of her step-son, because that's essentially what you're hoping she will do isn't it?

This is a gross oversimplification, but if you were completely ignorant about electrical work, would you entrust the family member who learned how to wire their own house on youtube to wire your house for you? or would you call the family member who was a licensed electrician?

Im not saying you get a better product from either person, I'm saying that there is a psychological comfort level that the person who does the work for a living is the better choice. Obviously, the bogleheads understand that your aunt is getting ripped off, but she doesn't understand that. In her mind - "she's got a guy" and she sleeps well at night with that false sense of security. The other comical thing is that her stepchild probably doesnt understand that he is ripping off his step mom and all of his other clients.

There is also a possibility that she does understand that she is getting ripped off and doesn't care enough to make a change.
mptfan
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Re: Do you ever wish you could help relatives improve their finances?

Post by mptfan »

gmc4h232 wrote: Mon Oct 28, 2019 3:15 pm Even if you did give her advice, why would she trust your advice over that of her step-son, because that's essentially what you're hoping she will do isn't it?

This is a gross oversimplification, but if you were completely ignorant about electrical work, would you entrust the family member who learned how to wire their own house on youtube to wire your house for you? or would you call the family member who was a licensed electrician?
Exactly. Your relative is unlikely to trust your advice about money that you got from an anonymous website over someone who is an investment professional.
Texanbybirth
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Re: Do you ever wish you could help relatives improve their finances?

Post by Texanbybirth »

To answer the OP question: yes, and I do help when they call and ask for advice. It's not everyday, but being the CPA in the family affords me more opportunities to "preach" than most people get.

Generally it's about 40/60 whether the advice is followed or not. I don't let it bother me at Thanksgiving or birthday parties, though, as I still love my family members regardless of their poor financial choices. :D
“The strong cannot be brave. Only the weak can be brave; and yet again, in practice, only those who can be brave can be trusted, in time of doubt, to be strong.“ - GK Chesterton
dcdowden
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Re: Do you ever wish you could help relatives improve their finances?

Post by dcdowden »

I had an elderly aunt who called me once and asked me what a 'margin call' was. Her husband had passed away a few years earlier and her son was killed in a car accident before that, so I was the logical person for her to ask. Apparently a broker (I will leave the company name out of the picture) had put her in several small high tech stocks using the Abbott stock she had accumulated by working there for many years as collateral in a margin account. The more I saw, the less I liked. Apparently, the broker had her investment objective on her account listed as 'Speculation'. Obviously not at all appropriate for an 80 year old widow. When I talked to the broker about how inappropriate this was, all he could say was that it was listed on the statement and she never objected. I helped her move her account to Schwab and she gave me POA to manage her investments. I also did taxes for her after that as well, and eventually served as executor when she passed a few years ago. It really annoys me that there seem to be a bunch of people out there trying to exploit elderly clients when it comes to their finances.
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Clever_Username
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Re: Do you ever wish you could help relatives improve their finances?

Post by Clever_Username »

The only time I have helped a relative improve their finances is when my sister asked me to help her. Mostly now it's mechanical, as she logs into Vanguard once a year to press the button to put money into her IRA and I walk her through that. I also, at her request, look over 401(k) documents every time she changes jobs and help her with rollovers. One year, she was a few hundred dollars away from maxing out the contribution, so I gave her the difference (and allowed her to keep the tax difference too, great sibling that I am). I suppose that helped her improve her finances too.

I do not recommend offering unwanted advice to anyone, whether it's financial, emotional, or a swing tip in golf.
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MrBobcat
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Re: Do you ever wish you could help relatives improve their finances?

Post by MrBobcat »

I wish my extended family would improve their finances and I wish they wanted me to help but they have no desire to change their ways and I'm not about to intrude unless they ask. Most of them are financial disasters.
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Re: Do you ever wish you could help relatives improve their finances?

Post by LadyGeek »

This thread has run its course and is locked (relationship issue). See: Acceptable Topics and Subforum Guidelines
This is an investing and personal finance forum. We also maintain a subforum that allow our members to discuss consumer goods and services and recreational activities. Anything else is considered "Off Topic" and is not acceptable on this forum.
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