My cousin and his "financial advisor"

Walt34 said:
Like many others I think you've done all you should and have pointed out the high fees and made him aware of a viable alternative. Perhaps point him to some books on investing.
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I suggested he consider reading "Investing for Dummies" because it is such an easy read for beginners. But I could tell he had absolutely no interest in reading a book about finance. He kept asking me to explain things to his wife because he did not want to get involved.

I suggested Vanguard because the wife already has an account there, and I know they will consider combined assets when determining what level of support he is eligible for.
 
I had a good talk with my brother about some of the stuff he was in, but then he asked me. I too got him out of this stuff but at least it was a bit calmer..
 
Ready said:
I'm thinking I will wait a week or two and see if he follows up with me to ask any questions.
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There might be some value in changing communication modes--verbal comms doesn't give the recipient time to read and re-read the info, it gets more emotional, and it sometimes just comes too fast. He'll be left in the position of trying to remember the points you made in the face of a polished sales onslaught from "the guy". If in your boots, I might send him an email with a synopsis of the problems with the present advisor's recommendations, then a general comment on the conflicts of interest that an advisor compensated in this way normally has. Tell him how low his fees could be, and mention the idea of finding an advisor that works by the hour to reduce his costs and (more importantly) reduce conflicts of interest.
Include some links to good discussions on this board, and maybe a few book recommendations.
Then make it clear that he can talk to you any time about it, but that you don't intend to raise the issue again on your own, since you realize this is his business and not yours, and that people are sensitive about financial issues.
Then you'll have given him a fighting chance to recognize trouble when he sees it, a path to doing things smarter, and you've left the door open for him to talk to you about it, but he doesn't need to worry that you'll keep bringing the subject up. I think that's the best you can realistically do.
 
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To think I'm mad about paying Fidelity an average 75 basis points for mutual funds. New money's going into ETF's at 15 basis points.
 
We made a rule many years ago that we have stuck with. It has worked for us even though we have almost succumbed to temptation a few times (and thank goodness we did).

Never go into business with relatives or friends, never enter into any financial dealings with relatives or friends, and always deal with investment advisors, real estate agents, lawyers, etc at arms length...ie get the best you can find and don't look for a new best friend.
 
Here's the only piece of advice I offer to people: to weigh value of advice against what that person has to gain from your taking it, and as a secondary consideration, do you have evidence they actually know what they are talking about (ie are they a successful investor?).

But by and large, confirmation bias is a persistent devil.
 
As a youth, I used to "help" people. I really thought they would benefit from my financial knowledge. Unfortunately, some times they only grabbed a small bit of info and went off in the wrong direction. Other times, they only wanted validation. I was critical of them instead of agreeing that they were "Oh so smart". So, with wisdom and age, I just reply "You have a complex situation. I just don't have the time to understand all of the details". In other words, I agree with Travelover. No good deed...
 
My niece asked me what I thought of gold a year or so ago. I told her it could either go up or go down but that I don't own any and probably never will (except as a piece of jewelry.

She went and bought some (hopefully not much) anyway. I'm sure she regrets it now.

But she did ask, otherwise I don't tend to offer advice.
 
My cousin just called me. He read the article that wannabe found - thanks again for sending that!

The broker called him today to try and convince him to stay until next year to waive some fees, but my cousin asked him about the article and ultimately got the picture of who this guy really is. His wife set up an account with Vanguard and requested the entire amount to be rolled over. He said he would call me if they have any questions on what to invest in, but even if he doesn't, I trust Vanguard to give him advice that is less self serving than this sales guy was doing.

So I guess it seems to have worked out for now. He was very appreciative that I looked at the account and pointed out all the fees.
 
Great to hear this story has had a happy ending!
 
Wow. Great work. I hope that it didn't cost him too much in the short term. I guess on 85k it is an inexpensive lesson. In the long term, the return will be immense. Kudos!
 
My hat is off to you. I married my only one and only convert.
 
Just remember, no good deed goes un-punished. If the market tanks, and he loses money , guess who will be blamed :facepalm:
 
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