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Need help firing a close friend/financial advisor

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  • CordMcNally
    replied
    This thread is nearly a year old and the OP hasn't been active in 1.5 months so we'll close this down for now and if the OP has anymore questions or discussion points we can open it back up.

    Leave a comment:


  • White.Beard.Doc
    replied
    It's fine taking responsibility for your parents investing decisions when the markets keep going up and they are richer every year. But it is can get pretty rough when the market is down and they see their nest egg diminishing. And the same goes for siblings, they are happy when they anticipate getting a larger inheritance, but when the nest egg is getting smaller, not so much.

    It is much better for your parents to manage their own finances, either with or without professional help. In your shoes, I would be happy to lead the parents to investment learning resources, and happy to discuss their thoughts. But caution is advised when mixing business (money) and extended family.

    In my own extended family, I have tried to offer support and general advice, but not to take over. My elderly relative lost a large chunk of a multi-million dollar inheritance to various exorbitant trust and investment fees. I had suggested she look at less costly alternatives for trustee, etc., but she liked the people in the trust department at the bank. She felt they were her friends and trusted advisors. So here we are with the trust having dwindled over the years, and she is finally understanding what I was saying over the last 3 decades. It is quite late to the game, but recently even her trusted "friend" in the trust department said she should look for a cheaper alternative. Now that she is 86 years old and there is less than 2 million left, they aren't raking in the dough from the AUM and trust fees like they used to. The point is, I was comfortable making suggestions, but was not comfortable pushing too hard or trying to fully take things over. And yes, it was very painful to watch the roughly 2% in total annual fees on a conservatively invested portfolio earning around 5% per year. That means that 40% of the earnings on the trust each year went to the bank, 60% to the beneficiary. Ouch!

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  • Jenn
    replied
    When Dad kept complaining about my step-mom I'd discuss it with her- he stopped oversharing! I feel maybe the friend did a lot of upfront work (I dunno, is all that 1035 stuff difficult? Could you have done it yourself?) that the next few years of AUM was going to pay him for. I also see you will be less able to do what you plan to for your parents as you start residency. Sounds like the parents made 2-3 mistakes- first bad FA, second pricey FA (your friend) and 3rd taking your advice on your friend! Slow down and don't guide them to make a 4th one (perhaps that 4th mistake would be putting you in charge).

    Leave a comment:


  • burritos
    replied
    Originally posted by Lordosis View Post

    Probably relieved. I try to avoid doctoring to people I know on a personal level but sometimes you get forced into the situation.
    Easy way to get out of it is to start being judgmental and start yelling at them with snark. My mother no longer milks the free medical advice line as much as she once did. Unfortunately this tactic doesn't actually stop painful patients from coming back.

    Leave a comment:


  • Lordosis
    replied
    Originally posted by burritos View Post
    If a friend fired you as a doctor, how would you take it? Exactly, shrug. Same thing no?
    Probably relieved. I try to avoid doctoring to people I know on a personal level but sometimes you get forced into the situation.

    Leave a comment:


  • burritos
    replied
    If a friend fired you as a doctor, how would you take it? Exactly, shrug. Same thing no?

    Leave a comment:


  • Andrew Musbach
    replied
    This concern/perceived awkwardness is why there is something like 93%+ retention rate for advisors in general. The onus is on the advisor to continue justifying you paying their fee and you don't owe anything to the advisor - it's a service you're paying for. I know advisors that have had to "fire" their clients or move them to someone else, and they struggle just as much with how to handle this, so it's human nature to dislike these conversations. You'll never regret being nice in the way you handle "firing" someone.

    I'd always try to take the high road and like Utetooth mentions, I think that's the best route of being appreciative and then saying you want to DIY.

    Best case, you should receive a kind/professional reply with the advisor understanding and they'll help you with the transition. Worst case, they put up a stink, and you can be glad you made the right decision and you simply remove the advisor from your accounts by calling the custodian (Schwab/TDA/Fidelity).

    Leave a comment:


  • Utetooth
    replied
    I recently helped a friends fire his friend who was his advisor and he was SO WORRIED about it, it was keeping him up at night. He wrote a nice email that said he had taken an interest in his own finances and wanted to DIY. The friends reply was kind, professional and ended up being no problem at all. I truly believe this would be the response from most true friends and I hope you have the same experience.

    Leave a comment:


  • MDPhD_wishingitwasanMBA
    replied
    The big issue here in my eye is that you are MED SCHOOL. You have residency coming down the line and then practice decisions and learning how to be on your own when you start practice etc etc.

    I would NOT take on the burden of your parent's finance stuff while you are trying to navigate residency (esp with siblings - might be a bit different if you were an only child and your parents were "all this will be yours some day Simba")

    As gets repeated on this site regularly:your job in residency is learning how to practice and take good care of patients - full stop. The money will come later.

    Leave a comment:


  • VagabondMD
    replied
    "It's not you, it's me..."

    ("Well, maybe it's you...")

    Leave a comment:


  • CordMcNally
    replied
    Originally posted by VentAlarm View Post
    You know what they call people who require you to pay them for their “friendship”?
    Escorts?

    Leave a comment:


  • Nysoz
    replied
    It’s harder because you’re talking about your parents money which can be tricky.

    When i fired my advisor I literally just said I want to manage my own money. They asked if I was sure and I said yes.

    Leave a comment:


  • VentAlarm
    replied
    You know what they call people who require you to pay them for their “friendship”?

    Leave a comment:


  • racelari
    replied
    dude, does your buddy work at a big firm? My former FA and high school buddy of mine worked at Northwestern Mutual, and despite being ripped off from my buddy these insurance companies and firms have to follow what you want, even if you don't talk directly to your advisor. There are somethings that you need your buddy for, and just tell them what you want and they are required to do it. Here is how I painlessly "fired" my buddy without actually having the painful discussion of firing him and getting out of the products.

    1. for disability insurance and term life, I used Bob Bhayani and Ravitz pearson, and once I got appropriate insurance in place, then I called NWM directly to cancel my disability and term 80 convertible insurance policies, and asked for in-force illustrations for my whole life policies and placed my premium payments on hold. Then I 1035 exchanged the cash value by calling Fidelity to "pull" the money out into a low cost VA

    2. my buddy had put a VA within an IRA for me , so I did tell him to liquidate the VA citing poor returns. Then again I had Fidelity pull the IRA money out into my Fidelity solo 401k. if you don't have solo 401k you could ask your current employer 401k to pull the money out

    3. I asked him to sell my stuff in the NWM taxable account, was only a few thousand bucks in there, citing I was in credit card debt and needed the cash

    4. he had put me in virginia advisor led 529 plan- I called Virginia 529 to put me in the self directed plan- went from 150 basis points to 9 basis points!

    Now I am fully disassociated from my buddy without having ever formally having any uncomfortable conversation about firing. I did have credit card debt throughout this time, which was also a good excuse for saying that my buddy was doing a piss poor job and I could no longer keep paying for his products. Maybe you can make up a similar situation for yourself for your buddy.

    Leave a comment:


  • Tim
    replied
    The is a big difference between helping your parents learn to be independent and taking over the responsibility.
    A simple three fund portfolio suggestion may be perfectly fine. They have a business, let them do it. Your role is to assist getting them to be independent. Who does their taxes? They can accept your recommendations, but there needs to be checks and balances.

    I will say this politely. You do not have the credentials and training to perform the functions you are attempting. Be an advisor, make suggestions. They make the decisions. Doing the decision making is not sharing your wisdom.
    That in no way means to keep their advisor.
    Let your parents handle their on business. If you weren’t their child, you would be practicing without a license.

    Leave a comment:

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