Navigating Family Finances: Lessons from Helping a Relative
When Family and Finances Mix
A while back, a relative turned to me for help with her investments. Previously, she paid about 1% in asset management fees to Goldman Sachs Asset Management (GSAM). As an artist with limited financial knowledge, she felt overwhelmed and wanted a fresh start after her breakup. This presented an opportunity to offer my expertise, but it also revealed some crucial lessons about managing family finances.
Creating a Solid Investment Plan
We kicked off our collaboration with a call to assess her financial situation, goals, and concerns. We devised a strategy focused on preserving her lifestyle and building a sustainable asset base. With experience in the field, I recommended Fidelity for its user-friendly platform, allowing me to manage her portfolio more efficiently.
By shifting her assets from GSAM, we eliminated the hefty management fee and switched to low-cost ETFs, saving her thousands while still aiming for long-term growth. Initially, everything went smoothly; her portfolio steadily climbed, and I relished the role of wealth-builder.
The Pressure of Performance
However, market turbulence eventually hit. When her portfolio took a dive amid trade wars, she contacted me in distress, full of understandable questions and concerns. I reminded her of the game plan—emphasizing the importance of staying the course—but felt the pressure mounting. When managing money for family, emotions run high, making it tough to compartmentalize.
Despite our previous successes, my relative was dissatisfied, viewing losses as personal failures on my part. This was disheartening; it felt like I was thrust back into the realm of unpaid labor, akin to what pushed me to leave a traditional job in the first place.
Recognizing the Emotional Toll
Managing another’s money is not just about numbers; it involves emotional labor, especially during market downturns. I saw firsthand how critical it is for financial advisors to balance investment management with emotional support. This unique dynamic amplifies the stakes when helping family members.
While I’m committed to overseeing her investments and helping her learn, I realized the need to protect my time and mental well-being. Transitioning our strategy to a slightly more conservative one could help alleviate stress for both of us.
The Case for Professional Guidance
For those contemplating hiring a financial advisor, consider this:
- Peace of Mind: A qualified professional can shield you from market swings, allowing you to focus on what you love, whether that’s work, hobbies, or family time.
- Consistency: A good advisor helps enforce discipline in investing and risk management.
- Accountability: Having someone to guide you can make a significant difference in achieving your financial goals.
Final Thoughts
If you’re managing a relative’s money for free, remember the importance of communication and appreciation. A simple “thank you” can foster goodwill and reduce stress. If you’re not currently navigating family finances, consider enlisting a professional’s help for the peace of mind they can offer.
In the end, well-managed finances can pave the way to a stable future, freeing you to enjoy life without financial worry.
Writes about personal finance, side hustles, gadgets, and tech innovation.
Bio: Priya specializes in making complex financial and tech topics easy to digest, with experience in fintech and consumer reviews.