Am I crazy to offer a gift of financial planning services to my cousins?

December 20, 2009 5:10 AM

My Aunt, Uncle and cousins have never been good with money, and have also never had well paying jobs. My Uncle has just inherited a (low) six-figure sum. Do I try to help them out by offering to build a financial plan for them?

I'm a well-off thirty-something professional, with some accounting and finance training. My Aunt and Uncle are in their fifties, and the cousins are in their twenties and still living at home. From what I can tell, they have lived paycheque to paycheque for years. They own a home rather than renting, but that is mainly because of an earlier inheritance (and the home is not paid off). Without help, I fear that they will fritter away this latest windfall, and there's no more inheritance money to come.

They live about two hours away from me, so most of the planning work (other than an initial consultation) would be by phone or email.

I'd like to help them out, but I'm afraid it's just a recipe for unhappiness and family strife. Has anyone tried this before? Did it work out well or poorly? Any other ideas for ways to help?

posted by RecalcitrantYouth to work & money (11 answers total)

Can you offer to help them find a local financial planner instead? It's not like they can't pay for it now and might keep you out of the doghouse.
posted by chesty_a_arthur at 5:38 AM on December 20, 2009

you might be overly sensitive to the idea that someone might try to take advantage of their newfound cash, don't be their suspect. if it were me, i wouldn't make them a financial plan, but would casually discuss the basics of good finances-- i.e., save x% of paycheck and setting it up to be automatic, pay off credit cards every month and whatever mortgage payment, simple budget tips to make sure they stay under whatever they have leftover. Don't bother recommending they get into stocks, the risk of the market will become your relationship risk. not worth it.

do this casually over brunch or something, try to be respectful about the fact that they're much older than you and probably don't like being given advice by someone much younger acting like they know it all, even if in this case you do know a lot more, and you should be good to go

good luck!
posted by saraindc at 6:13 AM on December 20, 2009

I have had a family member help me out with a financial plan, and it was a recipe for unhappiness, resentment, family strife, etc. Only now, a few years later, do I realize the incredible kindness that it was.

Maybe you can very gently and kindly show them some articles about dissipation. Here is an article from Sports Illustrated that I have shared with many clients. It talks about why athletes so often go broke after receiving those large contracts, with key reasons being that other people ask for money (start a business, help pay off mortgages, etc.) and most human beings want to help their friends and family members. I am suggesting this article because it may help avoid your conversation seeming like you think your family members are unable to manage money, and put it more that you are protecting them from shady people.

I don't think you should make this your problem, but you might find a good contact near them, give them some info and give them a personal referral.
posted by bunnycup at 6:19 AM on December 20, 2009

If they haven't requested your help, the answer is no.
posted by HuronBob at 6:21 AM on December 20, 2009 [2 favorites]

You know what they say about good intentions and the road to hell, don't you?

I work in banking, hold a couple of Masters in finance and even teach the subject part time at a University; needless to say, I get approached by lots of people who would like me to help them manage their money, almost always after landing a windfall.

Some even offer to pay me but it doesn't matter, in situations like this I only give two pieces of advise:

First put that money some place where you can't get at it for a while, preferably one year or more.

And second, here's a list of books on basic money management. Get back to me once you've read them.

Needless to say, this isn't the advise most folks want to hear.

Oh yeh, I guess there is a third tip I pass along: don't touch that money until you've read these books and if you do touch that money before reading those books please don't complain or ask me any questions about your "investments".

Believe me, my family is piss poor with money as well (a cousin back in the United States just pissed through a $200K insurance in about one year with almost nothing tangible to show for it!!) and long ago I learned voicing my opinion wasn't welcome.
posted by Mutant at 6:25 AM on December 20, 2009 [5 favorites]

I was going to come in with Mutant's advice, which I got from Jane Bryant Quinn, my guru. She says the thing to do with a windfall is park it somewhere safe for awhile while you study up and think about what to do. I hate to get unsolicited advice, and try not to give it, but if someone I knew inherited a chunk of money, I would probably say that much, and in that way. "You know, JBQ says..." and then drop it.
posted by not that girl at 6:38 AM on December 20, 2009

So, in other words, No, I would not offer to help with financial planning, per se. Because I have done a lot of reading on the subject and am a reasonably well-informed layperson, I might very gently offer to suggest the handful of books I found most useful, say. On the other hand--people are not generally very open to advice they didn't ask for, so I might not.
posted by not that girl at 6:41 AM on December 20, 2009 [1 favorite]

The advice given by Mutant and not that girl would be great for a relatively non-financialy-sophisticated middle class guy like me, who could afford to park the money for a year while he studied up and formulated a plan. OPs family is not likely to do that. Op is not worried that they'll be scammed, s/he's worried that they'll piss it away. bunnycup's advice seems spot-on, do t at one remove. It's a mitzvah.
posted by fixedgear at 6:46 AM on December 20, 2009

Leave well alone - they appear to manage just fine without you and they will consider the money well spent even if you don't.
posted by koahiatamadl at 6:57 AM on December 20, 2009 [1 favorite]

It's nice that you're concerned, but unless they ask for financial assistance in any form, it's better to leave it alone. You may not approve of their (lack of) budgeting strategy, but it's not really any of your business to tell them what to do with their money -- it's one of those things that's too personal.

You might consider buying them a money management book as a gift, but even that's toeing the line a bit, IMO. And there's no guarantee they'll read it.
posted by asciident at 10:55 AM on December 20, 2009

So in summary - yes, I would be crazy. You're correct - it would probably end badly, I guess I just needed to hear someone else say it.

Before going down this path, I did look into local financial planners, but it's hard since I don't live there.

I'll try to figure out how to take bunnycup's advice, and work harder at finding a good, local financial planner should they want one.

Thanks all.
posted by RecalcitrantYouth at 10:58 AM on December 20, 2009