Family and CFP

[allwork&noplay]

My brother-in-law is a CFP for a major brokerage firm and currently handles my wife's Roth IRA. I know that many on this forum don't care for Financial Planners due to the high fees and poor performance compared to low cost DIY funds through places like Vanguard. I tend to agree with that perspective, but in this case I think he will look out for our best interests.

He waives the fees for her and will do the same for me as a family member. Obviously there is the issue of mixing family and money, but other than that, are there any advantages or disadvantages to investing through him versus Vanguard? Thanks.

 

[73ss454]

I would have him put you in index funds with vanguard via his brokerage. See how happy he'd be with that idea.

 

[quietman]

He's waiving what? Not charging you a fee for a financial plan? Not charging you sales load? He's certainly NOT waiving the internal expenses of the funds and you should still compare expenses vs Vanguard funds. Advantage: your investments probably still count towards some quota he's trying to meet. Disadvantage: If this goes badly you are probably going to have a hard time extracting yourself without family issues.

 

[REWahoo]

He waives the fees for her and will do the same for me as a family member. Obviously there is the issue of mixing family and money, but other than that...

I don't think you can dismiss the potential perils of this mix quite so easily. I cannot imagine any upside from what your BIL can do vs. what you can do on your own that would outweigh the risk of serious family discord down the road.

We all assume some level of risk with our investments. Why take on the additional risk of family problems if you don't have to? Not worth it.

 

[slazenger]

Obviously there is the issue of mixing family and money, but other than that, .............

You already gave enough reasons that makes it a bad idea. Why ask us to overkill?

 

[haha]

Obviously there is the issue of mixing family and money, but other than that...

Whitebread Americans tend to shy away from family linkage. But some of the most successful familes and subcultures would hardly deal with anyone who isn't family.

So to me at least, this is not an automatic no. Depending on the guy, your family culture, and other factors, it could be a great idea.

Ha

 

[samclem]

. . . are there any advantages or disadvantages to investing through him versus Vanguard? Thanks.

No advantages. Scores of disadvantages.

 

[saluki9]

Gosh, I love this crowd. No, I'm sure this guy knows nothing about investments that can't be learned from a bunch of strangers on the internet

I manage money for most of my family members. I can assure you that I look after those accounts very closely.

If you trust him, and he treats you well as a client I don't see what the problem is? My only caveat is that I tend to shy away from people who want to waive all of their fees for me. The fact is that he is running a business and you want this account to be important to him.

 

[REWahoo]

I manage money for most of my family members. I can assure you that I look after those accounts very closely.

I'm sure you do (not being facetious or sarcastic here) and there is no reason to believe the OP's BIL wouldn't be equally as conscientious. But that's not the point.

My thumbs down vote was based on what happens if sis ends up unhappy with the results of BIL's efforts? It could be very, very sticky to tell him "Thanks, but I no longer want you to manage my money." Conversations like that generally don't foster good family relationships.

I'm sure this guy knows nothing about investments that can't be learned from a bunch of strangers on the internet

Hey, not only are we good, we're cheap too!

 

[Sarah in SC]

I think he will likely look out for your best interests, but why don't you have a pleasant conversation now about your exit strategy if your situation changes in the future and you want to get out. Then you've got a plan in place if you get uncomfortable later.

I'd love to have someone like Saluki in our family! I'm sure your family is delighted by having someone with your credentials and current knowledge to advise them.

I give some very general advice on mutual funds, tax stuff, questions about mortgages, etc. But I'd not want to give anyone the idea in my family that I would actually "manage" their money.

 

[FinanceDude]

He's waiving what? Not charging you a fee for a financial plan? Not charging you sales load? He's certainly NOT waiving the internal expenses of the funds and you should still compare expenses vs Vanguard funds. Advantage: your investments probably still count towards some quota he's trying to meet.

You guys know so little sometimes it's scary..........

 

[FinanceDude]

I would have him put you in index funds with vanguard via his brokerage. See how happy he'd be with that idea.

How happy were you all the times over the years when folks turned down your financing through the dealer and didn't buy warranties, credit life, or disability?? Just wondering..........

 

[73ss454]

How happy were you all the times over the years when folks turned down your financing through the dealer and didn't buy warranties, credit life, or disability?? Just wondering..........

FD, all part of doing business, you take the good with the bad when your on commission.

I can remember many threads on this forum where everyone was beating up on car dealers and anybody else that's on commission. I remember Saluki laughing about how he beat a dealer down to no profit and then made the dealer take his credit card so it would cost the dealer more $. So what, who cares if that's what makes him happy.

When on commission, sometimes you bite the bear and sometimes the bear bites you.

My statement was after the BIL stated he was not charging any fees. Well, if that's the case he shouldn't have any problem putting all the money into index funds with Vanguard, no

 

[haha]

FD, all part of doing business, you take the good with the bad when your on commission.

When you work on commission, you got to sell if you want to keep your wife and kids.

So you do, and the more stuff with the highest mark-ups you can sell the better you like it.

So what? What does the customer expect? Unlike roughly 1/3 of the population you are not being supported by tax receipts.

ha

 

[73ss454]

Yup, no doubt about it, I lived on commissions for 35 years.

But when you tell a relative that your not charging any fees or profit then you should do the right thing for them. So I would think he shouldn't have a problem putting him in Vanguard and managing his port.

 

[haha]

But when you tell a relative that your not charging any fees or profit then you should do the right thing for them.

Oh, I agree completely. Family is a separate issue. After all, these are the people who you want to be able to rely on if the going gets rough in any way.

Ha

 

[HFWR]

Hey, not only are we good, we're cheap too!

Well, cheap anyway...

 

[Texas Proud]

I am also one that is surprised on how some people dis family members..

I give advice to almost all of my family members... for free... but I only give it when asked...

And usually, I give them options so they can make the final decision...

Most have gone into Vanguard, but some are in a few others they like, but they are good investments...

And I have also given advice to some co-workers when asked... they would come by and just start talking... and then ask... 'what should I do?'...

I have usually told people that don't listen to me on individual stock... I am bad at picking them.... but pretty good at portfolios....

BUT, do be careful with a BIL or someone else who does recommend some high cost funds... I was talking to my company's outside adviser on some of the very high cost funds.... and why do we offer them... and he said that Fidelity was recommending them for our size plan... and 'if they make more than someone else they pay for the extra fees'... it is this kind of thinking that you want to avoid.... just my thoughts..

 

[clifp]

He waives the fees for her and will do the same for me as a family member. Obviously there is the issue of mixing family and money, but other than that, are there any advantages or disadvantages to investing through him versus Vanguard? Thanks.

I think that disadvantages are primarily from his perspective. Will I put my wife in an awkward situation with her brother if I suggest investments that don't work out.

In general there are three issues with using a financial adviser

• Is he competent
• Is he trustworthy
• Does his fees justify what I can do on my own.

I think having a family member who is both knowledgeable and willing to help you with investments is terrific benefit. The same way that having a doctor, lawyer, CPA, or Vet in the family is great for if nothing else getting a second opinion.

Of all the silly letters that go behind financial advisers names the only two that should impress an individual investor, are CPA, and CFP in that order. The programs are rigorous and the pass rates for either credential are lower than the bar exam. I have an MBA, 25+ years of successful investing, and I can tell you that would take a full year of study for me to have a chance at passing a CFP. I have yet to meet somebody who has passed the CFP on their first try.

So while a CFP is no guarantee that guy is competent is an indication. Trustworthiness is an issue you will have to judge for yourself.

The final issue is fees, if he waives there is at least a reasonable chance he could make you more money than sticking your money in a couple Vanguard funds.

So my advice is unless your think your sister married, and stupid liar, you should at least listen to his advice. Now I don't think this gets you off the hook about learning about investing, because it is after all your money and your future. But to me 90% of successful investing is A. Saving more than you earn. and B. not doing anything stupid.

 

[brewer12345]

Of all the silly letters that go behind financial advisers names the only two that should impress an individual investor, are CPA, and CFP in that order. The programs are rigorous and the pass rates for either credential are lower than the bar exam. I have an MBA, 25+ years of successful investing, and I can tell you that would take a full year of study for me to have a chance at passing a CFP. I have yet to meet somebody who has passed the CFP on their first try.

Ah, I'd argue there is one more designation that one might value, and getting it makes getting a CFP look like a walk in the park. Just sayin'...

To OP:

Given that your BIL is treating you as a family member and he is bound by the ethical standards that go with a CFP, I would be willing to trust him were I in your shoes. It is up to you to judge his competency. More importantly, you should make sure they you see eye to eye with him. Make sure he understands your goals, risk tolerance, etc. and doesn't color outside the lines with your portfolio.

I manage accounts for my parents and my wife's parents, and I manage them A) very carefully and B) with varying risk profiles (all of which are different from my own). It can work out just fine to let a family member help you.

 

[FinanceDude]

But when you tell a relative that your not charging any fees or profit then you should do the right thing for them. So I would think he shouldn't have a problem putting him in Vanguard and managing his port.

Not to offend anyone, but WHY should we deem Vanguard as the ONLY fund company out there? No love for FIDO, TIAA,Dodge and Cox, etc.

I must be the only one that thinks having a relative as a CFP could be construed as a "good thing".........

 

[FinanceDude]

Of all the silly letters that go behind financial advisers names the only two that should impress an individual investor, are CPA, and CFP in that order.

I think I would rank them CFA, CFP, and THEN CPA. I know TOO MANY CPAs that are HORRIBLE at managing their money or any others for that matter.......... I know saluki is a CPA but he "saw the light" and got a CFA..........

I have yet to meet somebody who has passed the CFP on their first try.

The first time pass rate on CFPis 52% or so. I know at least 5 people who passed it on their first try.

So while a CFP is no guarantee that guy is competent is an indication. Trustworthiness is an issue you will have to judge for yourself.

Agreed..........

 

[73ss454]

Not to offend anyone, but WHY should we deem Vanguard as the ONLY fund company out there? No love for FIDO, TIAA,Dodge and Cox, etc.

I must be the only one that thinks having a relative as a CFP could be construed as a "good thing".........

Nope, not the only one. I think it's great that you can help out your family.

I only used Vanguard as an example of low costs.

Your missing my point, if the BIL says he works for no fees then he shouldn't mind putting the funds in low cost vehicles. If he's putting him in let's say Oppenheimer then we know he's not doing what he said he is.

 

[FinanceDude]

Nope, not the only one. I think it's great that you can help out your family.

I only used Vanguard as an example of low costs.

Your missing my point, if the BIL says he works for no fees then he shouldn't mind putting the funds in low cost vehicles. If he's putting him in let's say Oppenheimer then we know he's not doing what he said he is.

I'm not missing your point, you are not understanding how things work. BIL of OP can buy LOAD mutual funds at NAV, because he's registered. With some fund families, you can buy at NAV for family members, so he could get American Funds or Franklin or Oppenheimer for NAV for family members. I'm sure NOT everyone on here knows that...........

 

[saluki9]

I think I would rank them CFA, CFP, and THEN CPA. I know TOO MANY CPAs that are HORRIBLE at managing their money or any others for that matter.......... I know saluki is a CPA but he "saw the light" and got a CFA..........



The first time pass rate on CFPis 52% or so. I know at least 5 people who passed it on their first try.



Agreed..........

The CFP exam was a joke compared to the CPA or CFA exams. Even the CFA didn't compare to the CPA in the sheer amount of material to cover. That being said, 99% of it doesn't have anything to do with investments or financial planning.

Most people would be shocked if they knew how little training most CPA's have even in personal taxes. It was hardly a blip in my accounting schooling or CPA study. I had to learn most of it through my work.

I'm just glad my exam taking days are over.