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Help a Reader: Inheriting a Financial Adviser

Posted By Jim On 03/05/2013 @ 7:15 am In Investing | 8 Comments

This week’s Help a Reader strikes me as a sticky issue that happens a lot. What happens when a loved one passes away and your inheritance includes a financial adviser you may or may not need (or want)? This situation happened to reader Cindy when her father passed away and she’s not sure if she should keep the adviser or not.

Here’s her dilemma in her words:

My dad passed away last year, and as a result, I have inherited some of his investments. I now have my own account at the same investment business and I have apparently inherited my dad’s investment manager, also. I’ll call him Jack. The thing is, I have no clue what to do now. I’m not crazy about paying for Jack and the big-time services of a business like Morgan Stanley, but I’m most definitely not qualified to jump into this on my own. My dad trusted this guy completely and Jack has also helped me a lot since my father got sick a couple years ago and I stepped in as PoA. But at the same time, my father used to be very active about buying, selling, researching, etc. All things I’m not really into.

So I now have these investments that were tuned to my dad’s age (85) and retirement goals, meaning a lot of municipal bonds, just a few stocks, and a few index funds. What the heck do I do next? Just let this guy keep doing whatever it is he does that results in a pretty big chunk of money being deducted each year (and maybe more, he may get commissions, too)? Do I try to find a new “guy” of my own? I’m really stumped.

Thanks!
– Cindy


The email was descriptive but I had questions for Cindy about her relationship with Jack because the first paragraph made it seem like they worked together a lot and the second seemed like they hardly knew each other. I asked her for some clarification and then whether she’d looked at advisers in the past.

Her response:

Thank you! I have never had an adviser in the past – I never felt I needed one. My inheritance has basically thrust me into a whole new arena at a rather late stage in life (I’m 53). I’ve done a tiny bit of stock purchasing on my own in the past, and I stick with index funds and mutual funds in my company’s 401K plan. This guy Jack is a very nice person, but I have absolutely no feel for what he’s like as a financial adviser, and now that I’ve inherited him along with my dad’s investments, I don’t know whether to keep him or not. He talks a lot and I frequently end up pretty exasperated. He spent 15 minutes once using lots of words and drawings to explain the concept of the core investments being used to generate income. I’m not an idiot, but I’m also not my father (chairman of the math dept at Pitt Univ). I just get uncomfortable when I think of this guy doing whatever it is he does with what’s now my inheritance – I often see a lot of action in the portfolio but I don’t necessarily see any growth. It all makes me nervous and I wonder if I’d feel better with someone I actually pick for myself.

Bottom line of all of this — I just wonder how people go about picking an adviser. I never needed one before, now suddenly I do and I’m clueless.

“So, if this were me…”

This email comes at a coincidental time because I just went through the process of vetting a financial adviser [3] that we’ll be working with. The reality is that the adviser should always be speaking to you on your level. It doesn’t matter how “smart” you think you are, how math inclined you are because financial advice is simple. It’s only made complicated by people who want you to think that you need them to succeed. You don’t. You can read some basic personal finance books and manage your own finances if you really wanted to.

I’d also talk to Jack again and explain that you need things explained more simply, not how they were explained to your father, because you aren’t your father. If he wants to stay on as your adviser, he better talk to you to your satisfaction.

That said, do you want a financial adviser? If so, look around at your options and don’t necessarily stick with someone your dad went with. I’d see if the fees he charges and the performance he’s able to deliver are in line with what you can get elsewhere. Performance is always a tricky thing but fees are not. Find out if you’re paying more or less than what you’re supposed to.

What do you all think of how I’d handle this situation? What else would you suggest? Or did I miss the mark on something?


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