- Oct 9, 1999
- 21,019
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Update 10/25:
Sat down with the relative the other day and explained in detail what I would recommend. He is against getting any "outsiders" involved, even in just an advisory role. His experiences with financial advisors has left a bad taste in his mouth (although none of them really did anything bad). His apprehension about not understanding investments makes him unwilling to trust anyone. He wants protection of capital first, and if there is any income, that's simply a bonus in his mind.
I explained it this way: I can invest the money in a way that's as safe as possible, but someone with more knowledge than me could get more income with the same amount of protection. He doesn't care. I said it would be possible to get $100,000 a year if he's willing to lock it up in multi-year CDs, and $50,000 a year if he wants to avoid anything with a withdrawal penalty. He said as long as he got $20,000 a year he is happy.
At the end I repeated that someone with more knowledge than I have could do better, again he said he doesn't want anyone else involved because he wouldn't trust them anyway. If the money is safe, he's happy.
I told him I would not be a signatory on any account. I will help him get it squared away, but I do not want any access to the accounts. He agreed to that and to review his estate plan with his lawyer, and asked if I would sit in on that meeting.
So the plan is this: $50,000 in a savings account for easy access, and the rest in laddered CDs through a CDARS account. CDARS gives you a way to deal with one bank, get one statement, but spreads your money out to multiple banks so no single bank holds more than the FDIC insurance limit. Safety is achieved, but growth is sacrificed. That's what he wants, so that's what will be done.
Original Post:
A retired relative called me aside a couple weeks ago at a family function and said, "You seem to know what you're talking about when we discuss managing money. I don't know anything about it, nobody in my [immediate] family does either. Would you handle some investments for me?"
I said I'd really rather not but I would be happy to give some general tips.
"No, I don't know anyone else and I am not going to let some stranger do it Tips won't help me because I don't understand it. Just do the best you can, that's all I ask. You always talk about diversification, safety, all that stuff... just do those things. Nothing fancy."
So we talked about what he was trying to achieve, which turned out to be leaving an inheritance for his kids, generating a modest income, and most importantly protecting what he already had. I figured that was doable, just invest in very, very safe things, so I agreed. He said he just moved his money to a new investment firm because the last broker was doing things he didn't understand and he didn't like that. And, he would send me his latest statement and I could tell him what to do.
Yesterday the statement arrived. I had NO idea. Now I really wish I had refused, but I'm not going to back out.
Sat down with the relative the other day and explained in detail what I would recommend. He is against getting any "outsiders" involved, even in just an advisory role. His experiences with financial advisors has left a bad taste in his mouth (although none of them really did anything bad). His apprehension about not understanding investments makes him unwilling to trust anyone. He wants protection of capital first, and if there is any income, that's simply a bonus in his mind.
I explained it this way: I can invest the money in a way that's as safe as possible, but someone with more knowledge than me could get more income with the same amount of protection. He doesn't care. I said it would be possible to get $100,000 a year if he's willing to lock it up in multi-year CDs, and $50,000 a year if he wants to avoid anything with a withdrawal penalty. He said as long as he got $20,000 a year he is happy.
At the end I repeated that someone with more knowledge than I have could do better, again he said he doesn't want anyone else involved because he wouldn't trust them anyway. If the money is safe, he's happy.
I told him I would not be a signatory on any account. I will help him get it squared away, but I do not want any access to the accounts. He agreed to that and to review his estate plan with his lawyer, and asked if I would sit in on that meeting.
So the plan is this: $50,000 in a savings account for easy access, and the rest in laddered CDs through a CDARS account. CDARS gives you a way to deal with one bank, get one statement, but spreads your money out to multiple banks so no single bank holds more than the FDIC insurance limit. Safety is achieved, but growth is sacrificed. That's what he wants, so that's what will be done.
Original Post:
A retired relative called me aside a couple weeks ago at a family function and said, "You seem to know what you're talking about when we discuss managing money. I don't know anything about it, nobody in my [immediate] family does either. Would you handle some investments for me?"
I said I'd really rather not but I would be happy to give some general tips.
"No, I don't know anyone else and I am not going to let some stranger do it Tips won't help me because I don't understand it. Just do the best you can, that's all I ask. You always talk about diversification, safety, all that stuff... just do those things. Nothing fancy."
So we talked about what he was trying to achieve, which turned out to be leaving an inheritance for his kids, generating a modest income, and most importantly protecting what he already had. I figured that was doable, just invest in very, very safe things, so I agreed. He said he just moved his money to a new investment firm because the last broker was doing things he didn't understand and he didn't like that. And, he would send me his latest statement and I could tell him what to do.
Yesterday the statement arrived. I had NO idea. Now I really wish I had refused, but I'm not going to back out.
Last edited:
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