Being solicited for financial advice

[BigNick]

So, a few colleagues have got wind of my imminent E(S)R departure here at MegaOrg. I'm mostly getting sympathy; presumably any jealousy is being kept under wraps.

What I'm also getting (2 cases so far) is veiled suggestions that people would like me to help them look at their finances and see if they can do the same.

I'm not sure about this. On the one hand, there are plenty of people here who are probably financially solvent and who, with a combination of a little existential counselling (aka "You really want to do this until you're 65?" ) and some number-crunching, could have a better life for themselves. On the other hand, even if I did it for free, I worry that I'd worry about the responsibility, no matter how many disclaimers I got them to sign. I'm not a certified financial adviser, nor do I have any intention of becoming one.

Should I offer to help, or smile politely and pretend that I haven't noticed the veiled suggestions?

 

[okapi]

I don"t give advice.However, I will suggest some investing books that are easy to read.I suggest Coffeehouse,Solin.Bogle,Bernstein,Ferri etc.I once loaned two of these books to my wifes relatives,both college educated,one with a masters degree.I went over their house A year later and the books had dust on them..Moral of story.If someone Does'nt follow my suggestion I let it go.I never tell anyone what to do.

 

[MichaelB]

My vote would be for

smile politely and pretend that I haven't noticed the veiled suggestions?

 

[Aiming_4_55]

Just smile and let them know you are quite busy planning the first few years of E (S) R!

At most, I would recommend to them to revisit their budget and trim expenses/save more.... what ever "more" means. Then mention .... 4 Pillars, Boglehead forum....

 

[LOL!]

Give them books. A copy of Jim Otar's "Unveiling the Retirement Myth" should be helpful to them.

 

[Bestwifeever]

Yeah, give them a book if that. And pretend you're furious, just furious, that you have to leave and act like you're going to be on a supertight budget when you do.

Who advised you?

 

[MichaelB]

I think recommending a book is an excellent idea.

 

[clifp]

I am a bit nicer, I offer to give the same level of advice that I give on the forum.
Which funds are better than others, the importance of asset allocation, and suggested books to read.

The way I figure it is if I have a question about subject which I am pretty ignorant say auto repair, or home improvement. I'll ask somebody who is knowledgeable for advice. They typically give me some pretty generic advice, mostly about things to watch out for. Sometimes a very specific advice get product A not B.

I never expect to come back and sue them if the advice isn't great, I just don't ask again.

 

[gerntz]

If someone asks for help & I think I have some help, I try to help.

 

[donheff]

I will talk to anyone who asks. What I won't do is offer opinions to people who haven't asked.

 

[BigNick]

I think recommending a book is an excellent idea.

I've never read a book on investing - 80% of my FIRE capacity is from LBYM. So it wouldn't be about investments as such, other than keeping costs down - it would be more about attitudes to spending, making sure you're really LBYM, having the courage to take the non-obvious decision, etc. As much "coaching" as financial advice, but as a student of "proper" psychology, I'm very wary of the label "coach", and I certainly don't want to get into advising on relationships etc.

 

[Chuckanut]

I do not give financial advice anymore that I would agree to photo a friend's daughter's wedding. The cost of a mistake is too high!!!! (Beware Bridezilla!!! Worse, beware the Mother of Bridezilla!!)

If the person is a GOOD friend I will tell them how I manage finances for myself. They can take what they want and leave the rest behind.

 

[Midpack]

Here's my answer from this thread http://www.early-retirement.org/forums/f28/advising-managing-other-peoples-money-59611.html. Nothing wrong with asking again, just thought the other thread might be of interest as well.

Probably no right answer, but I've refused to advise friends, family and co-workers all my life, even though they all know investing has been a successful hobby of mine most of my adult life and many have asked. I will recommend books to get them started, or plant questions in their heads if they're asking about something that I'm convinced is a bad idea, but that's as far as I'll go.

If I did make recommendations, what happens when the market takes a dive, as it always does periodically? Odds are they are going to be concerned, angry or even disillusioned with my 'bad advice' - not worth it to me. I have watched way too many people, who I haven't advised, meltdown when the market goes south and sadly make all the wrong moves. There's not much upside - the people who would understand and accept down periods, wouldn't be asking me for advice to begin with.

IMO the most elusive trait for successful investing is not picking funds or even asset allocation, it's the discipline to then stick with a plan. I just don't think you can easily instill that in another person.

Again, I am sure people have been successful helping friends and family with investing recommendations, I don't think I could. I'll gladly help anyone 'learn how to fish, but I won't fish for them.'

 

[travelover]

I've never had anyone take my advice. They don't really want to change their investing techniques, it just makes them feel better for a minute because it feels like a positive step. Kinda like the New Year's diet resolutions that are history by February.

Recommend a book.

 

[jclarksnakes]

I have occasionally been asked for financial advice. I think people who see someone retired early think there must be some big secret. I tell them that the only SECRET is to LBYM and invest in the market and leave it in the market no matter what. Also never, ever pass up an employee match. LBYM and save and invest is where most people come up short. For someone who has little or nothing saved it is pointless to discuss market timing, AA or particular stock or fund picks. Face it, during our lifetimes even a blind hog (like me) could have followed LBYM and invested and stayed in the dullest stock funds and still would have ended up pretty well off.

 

[pb4uski]

....I will tell them how I manage finances for myself. They can take what they want and leave the rest behind.

+1 and also refer some books to them and suggest that they troll this forum for a while. And remind them that you are glad to tell them what you think based on your experience but that they are ultimately responsible for their own decisions and what they do.

 

[Nords]

What I'm also getting (2 cases so far) is veiled suggestions that people would like me to help them look at their finances and see if they can do the same.
Should I offer to help, or smile politely and pretend that I haven't noticed the veiled suggestions?

You could tell them that you LBYM'd your way to ER, and that there are many types of financial portfolios that will do the job.

You could also tell them that they might want to check up with you in a few years to see if your crazy ER plans are really working out...

If they're (U.S.) military servicemembers or veterans then feel free to refer them to me.

 

[W2R]

Before I retired, I found that 100% of co-workers asking for financial advice wanted a stock tip that would act as a "magic bullet", allowing them to retire without making much effort. They did not want to hear anything about LBYM, and would shut off their ears and mind if cutting back on spending was suggested.

So, I usually just pushed the TSP and contributing the max if possible. They probably would have passed out had I mentioned that contributing to the TSP wasn't all they might have to do.

 

[FIREd]

In 2007, after her divorce, MIL asked for my help with her finances. Her portfolio was invested entirely in a single mutual fund, with a high expense ratio and a portfolio composed exclusively of foreign stocks. So I advised her to move her portfolio to Vanguard and diversify into a more conservative mix of stocks and bonds. When the financial crisis hit, however, she lost some money in the market and she kind of blamed me for it despite the fact that she would have lost a lot more if I had not insisted on some diversification. Her portfolio later recovered but the whole episode left a bad taste in my mouth. I now refuse to give financial advice to anyone I know. Last year, a good friend asked me where I was investing my money, and I kept my answer as vague as possible. Pointing people asking for advice to a book is a good strategy IMO.

 

[pb4uski]

In 2007, after her divorce, MIL asked for my help with her finances. Her portfolio was invested entirely in a single mutual fund, with a high expense ratio and a portfolio composed exclusively of foreign stocks. So I advised her to move her portfolio to Vanguard and diversify into a more conservative mix of stocks and bonds. When the financial crisis hit, however, she lost some money in the market and she kind of blamed me for it despite the fact that she would have lost a lot more if I had not insisted on some diversification. Her portfolio later recovered but the whole episode left a bad taste in my mouth. I now refuse to give financial advice to anyone I know. Last year, a good friend asked me where I was investing my money, and I kept my answer as vague as possible. Pointing people asking for advice to a book is a good strategy IMO.

So even after you showed her where she would have been if she had stayed in the single high ER fund compared to what you recommended she was still upset?

 

[travelover]

So even after you showed her where she would have been if she had stayed in the single high ER fund compared to what you recommended she was still upset?

Don't try to bring rational thought into this discussion.

 

[pb4uski]

Don't try to bring rational thought into this discussion.

Oh, right - I forgot - it was a MIL.

Everyone knows that SIL's can't do anything right.

 

[FIREd]

So even after you showed her where she would have been if she had stayed in the single high ER fund compared to what you recommended she was still upset?

Unfortunately, yes.

 

[HatePayingTaxes]

Same experience as FIREd. A friend asked where to invest his money and gave him general diversified funds advice. He followed it but, when the market tanked, he blamed me. Since then, I'm much more careful with giving advice. I still do but mainly in LBYM talk.

 

[akck]

I've helped a SIL, managing her IRA, and will be going over the benefits of a friend because we're both in the same retirement system.

After being asked, I couldn't stand by knowing my SIL's broker had robbed her blind by buying her front-load mutual funds with >1% expense fees. Her husband retired on a medical disability and she was burnt out from job stress. I told her she could retire early, after they refinanced their 7.25% mortgage (meant working 3 months longer than she planned). They could have paid off the mortgage, but they wanted to hold onto the funds in case of an emergency.

My wife offered my help to our friend, since I've thoroughly researched our benefits. The plan is to go over her income sources and expenses and see if she's good to retire or not. I have no plans to invest her funds, other than giving her options to research and maybe a book or two to read.

Family and a few friends are about all I'd feel comfortable providing financial advice. Even then, it would be more bout giving them a direction versus them wandering around, not knowing where to start. Oh, and no investment tips, other than some index funds.