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Need advice helping parent move funds from Financial Advisor (American Funds)

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  • #46







    “The older generation is blind to the facts.”

    The facts are, your mother has chosen an FA that let’s her sleep at night.
    She is 75 with $4.5 mm with an AA that seems to not be a problem. ER’s at .73 and AUM at .5%. Please note, she probably understands the graphs with a nice explanation that she has made a good hunk of change so far this year. The only complaint is .73 ER is too high and the FA is charging her an AUM.

    What did she think about your presentation? It seems she is actually being treated extremely fairly. Do you have any problem with her AA or portfolio? (other than the total of 1.23% ) that gives her trusted advice and she can ask any question and get a gentle probing of her real motive and concern and most likely a sincere fiduciary answer?

    At 75, I hope you actually are proud of her standing up for herself. She can afford the relatively small fees unless you want her to start feeling stressed and nervous. Her choice of words, you are missing. It’s not that you aren’t a FA professional. She simply trusted the current situation and feels she wants to continue. A mother’s way of not hurting your feelings.
    Looks like she will be fine. The person that will end up with less will most likely be the beneficiary. No offense, it’s her choice. Feel free to have her discuss your suggested portfolio with the FA. Best of both worlds. Low ER’s and she might decide not to pay the AUM.
    Nothing wrong with helpful suggestions.
    Click to expand…


    Wait, I thought the OP laid out something like $300K in assets in the OP. Where did the millions come from?

    I wouldn’t call 1.23% on $4.5M small fees either. That’s like $60K a year compared to a Fidelity Zero Mutual Fund 3 fund portfolio.
    Click to expand...


    Were it only that easy!

    Short update: since original post, my parent has moved into a HYSA and transferred some funds to a Vanguard taxable account. I never did meet with the financial advisor. I'm letting my parent do things at their own pace and comfort level and providing assistance as needed navigating the path. @goatmom parent is definitely encouraged to spend the money as they see fit. I think we're both happier about the overall situation.

     

     

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    • #47
      I worry about helping family for several reasons. One that might not have been mentioned is if they do not understand normal market movements. You can set them up with a very conservative 50/50 portfolio and if the market takes even a typical 10% dive they or other family might blame you for the loss. We all know that is ridiculous but "normal" people know nothing and fear the market. It is hard to truly educate someone on investing if they do not have the desire.

      I read about people who are very into it talk about not looking at balances when the market tanks. That is one way to avoid freaking out and selling low. But I am more a fan of the toughen up cupcake way.

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      • #48


        I’m letting my parent do things at their own pace and comfort level and providing assistance as needed
        Click to expand...


        Wonderful job. Your parent are not "blind to the facts". Most likely, not "deaf and dumb" either. What you have is someone that really appreciates all the help you have given. The fear factor is not you, it is the market.

        Hopefully, the next step is "mom" wants you to be able to check on things.


        You can set them up with a very conservative 50/50 portfolio and if the market takes even a typical 10% dive they or other family might blame you for the loss.
        Click to expand...


        Setting expectations is critical. 50/50 is designed to underperform the "market" (100% S&P or DJIA). Expect lower gains and lower losses, long term is the goal. How much did "we lose?" I don't know actually takes the edge off. Not all obviously. Talking them off the cliff is the emotional responsibility you accepted in giving advice. It is ************************ good advice.

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