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I inherited $15 million from my father

Discussion in 'Real Estate & Other Investments' started by Scorpio, Apr 2, 2017.



  1. Scorpio

    Scorpio Скорпион Founding Member Board Elder Site Mgr Site Supporter ++

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    I inherited $15 million from my father — his advisers treat me like a spoiled child
    By Quentin Fottrell
    Published: Nov 27, 2016 11:55 a.m. ET







    This young man wants to take control of his father’s money


    [​IMG] Terrence Horan/MarketWatch
    Dear Moneyologist,

    I was hoping you could help me wrap my head around a situation, which is maybe similar to other questions you’ve had and perhaps a little more a philosophical than a financial problem. My father passed away almost two years ago leaving me, his only child, with a fully invested portfolio of over $15 million to take care of with the help of a few financial advisers, of course. I have been struggling ever since figuring out what to do about it, what to think of it and what place I have to take in the process of being my father’s son. This sounds like “the burden of daddy’s money,” but I want to take more control of what happens to it.

    I was 21 and about to graduate in marketing (BA) at HEC Montreal in Canada at that time, and decided to take another major in finance the next year so I could have a better understanding of the market and not be overwhelmed by my advisers’ counsel. I have also read Benjamin Graham’s Intelligent Investor, which taught me a lot about how to think as an investor.

    Still, it is not the technical side that’s troubling me, but the human aspects of the whole process of learning to live as the old man’s junior. I feel I have so much to say I should send you a novel instead of an email. I’ll try to make it as short as possible.

    Listen: This week on Catey Hill and Quentin Fottrell’s podcast Money, Markets and More: (on iTunes): What NOT to buy on Father’s Day and The worst tipper in America.

    Some of my advisers have been handling my family’s money for over 10 years and view me as a mindless spoiled kid. One of them has notably neglected to re-balance the portfolio according to pre-established investment plan (without breaking any CFA ethics), which cost us quite a bit a money over the last two years (with very different market performances on top of that). Even so, they didn’t seem to take my concerns seriously and kind of wish I’d just go back playing with my toys.

    What should I do? Is there a magic trick I can do to gain their respect or do I have to threaten them to move the money elsewhere so they consider listening to junior? I’ve been thinking about meeting some new advisors to build a new relationship, but I have no idea what to look for in a good adviser apart from past returns and strategy. I have absolutely no intention to trade myself or manage that much money on my own at 23 years of age. I still have a lot experience to gain and wish to live a normal life without all that pressure until then.

    Thank you for your time.

    The Only Son in Montreal

    Dear Only,

    On the contrary, your letter may touch on familiar territory of inheritance, but your tone could not be more different from many letters the Moneyologist receives.

    There’s no self-pity, no anger, no plotting, no melodrama and no revenge. Not that I don’t appreciate the honesty of those emails , too. Frankly, they’re fun to read and give me a lot to work with. It seems like you have thought very carefully about the kind of service you want from your financial adviser — respect being No. 1 on that list — and have enough humility to know that you don’t want or need to manage this money yourself. What’s more, you’ve made efforts to brush up on the basics of investing. Bravo, on all counts! Your father would be proud.

    Trust your instincts. Your father wouldn’t have left this amount of money in your care if he thought you wouldn’t make the right decisions in order to manage it.

    Following an agreed plan of action is the very least they should do. If they can’t do that, it’s time to see what else is out there. To somehow brush off your feedback after such a mistake — they are working for you, remember, not the other way around — makes them complacent (at best) as well as possibly incompetent (at worst). There are plenty of advisers out there who would relish the chance to manage your $15 million, safeguard your father’s hard work and make sure you’re getting a good return on your investments, so you can live your life. Trust your instincts. Your father wouldn’t have left this amount of money in your care if he thought you wouldn’t make the right decisions in order to manage it.

    Don’t miss: Should I keep my $100,000 inheritance a big secret?

    What should you look for in a financial adviser? Wealth manager Carola Dias Jr. says you shouldn’t be bamboozled by titles. Chartered Financial Analyst (CFA) and Certified Financial Planner (CFP) are some of the most prestigious designations in the industry, he says. Check out the National Association of Personal Financial Advisors (there is an equivalent in Canada). Also, check with the CFP Board to see if your choice was ever disciplined. This could take the form of a public Letter of Admonition, a temporary suspension of the individual’s CFP certification or its permanent revocation, depending on the severity of the breach or other mitigating circumstances.

    The same rules apply if you were looking for a stockbroker or an accountant. Beware of hidden commissions or fees and promises of unrealistic returns. Don’t hire the first person you interview, don’t be cajoled into hiring friends or relatives who pitch you their services and never give him or her complete control. The candidates should also ask you questions about your financial goals, long-term plans and willingness to take risks (without you pushing them). If they don’t show an interest now, that’s unlikely to change. Ask about their payment structure: If they work purely on commission, they may take more risks than you’re comfortable with. Make sure they act according to a fiduciary standard — that is, a legal duty to act solely in your interest.

    Listen: Catey Hill and Quentin Fottrell’s podcast Money, Markets & More(on iTunes): Buy a condo in San Francisco for $168,000and When the best man forgets to bring a wedding gift.

    The more questions you have, the more respect you will earn from these candidates. And vice-versa. You can inherit a financial adviser, but you don’t have to stick with them, says Beverly McBride, a financial adviser based in St. Simons Island, Ga. And the same goes for your portfolio. “Your age, risk tolerance, and personal goals likely are vastly different from your father’s and should be reflected in your holdings,” she says. Client education should be part of your new (or current) adviser’s practice, she adds. “Look for an adviser who works to give you a little better understanding of investing in general and your portfolio.”

    You don’t have to make any hasty decisions and you can use this information to start a dialogue with your current team, and seeing what else is out there is a step in the right direction.

    Do you have questions about inheritance, tipping, weddings, family feuds, friends or any tricky issues relating to manners and money? Send them to MarketWatch’s Moneyologist and please include the state where you live (no full names will be used).

    Would you like to sign up to an email alert when a new Moneyologist column has been published? If so, click on this link.

    http://www.marketwatch.com/story/daddys-15-million-inheritance-has-become-a-burden-2016-06-14
     
  2. Scorpio

    Scorpio Скорпион Founding Member Board Elder Site Mgr Site Supporter ++

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    Assuming it is free to move, or to fire the advisors as needed,

    At is age, I wouldn't even think of keeping it all in stocks and other like investments. That is a massive risk, which could be evidenced by their poor performance.

    Well respected hedgie, ackman just booked a $4B loss because his ego got in the way of sound investing. Status means nothing.

    $15M isn't that big where one needs 'multiple' financial planners. Too many mouths to feed IMO.

    etc.
     
  3. nickndfl

    nickndfl Midas Member Midas Member Site Supporter ++

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    My dad died last year and I received a lump sum payment of $282 last month, no kidding. The guy was a dumpster diver and never purchased anything new. He also tried to get out of working whenever possible.
     
  4. GOLDBRIX

    GOLDBRIX God,Donald Trump,most in GIM2 I Trust. OTHERS-meh Site Supporter Platinum Bling

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    IF it were me. I would compare what the Market did those two years using the indexes to create a baseline. Indexes did better than he did. Ask him to provide the account with the difference from his own personal account OR return any financial remuneration he received from the estate during those two years.
    If Mr. Manager would not agree he would be relieved of his duties, no further compensation, and the funds he was responsible for would be moved from his service.

    Treat this money like you would your Homeowner's and Auto INS. Every three years or a year of bad production put out an offer for bids to provide services. Insurance Cos. plan on YOUR complacency and start "nickel and diming" ( figuratively ) price increases into the policies

    At least one of the guy's financial managers is getting complacent and at the least be placed "On Notice".
     
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  5. southfork

    southfork Mother Lode Found Mother Lode

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    The advisors sole interest is their commissions , nohting else.
     
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  6. GOLDBRIX

    GOLDBRIX God,Donald Trump,most in GIM2 I Trust. OTHERS-meh Site Supporter Platinum Bling

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    Depend. Are they "Advisors" or "Fiduciaries" ?

    An advisor "advises" and you make the actual transactions.
    A fiduciary - a person to whom property or power is entrusted for the benefit of another. A fiduciary's fee is commensurate with the value enhancement he brings to the investment. No enhancement to value = minimal / no fee.
     
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  7. GOLDZILLA

    GOLDZILLA Harvurd Koleej Jeenyus Midas Member

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    He sounds like a man who won the game of life !

    Living right and saving money for old age doesn't mean it is always gonna work. I know I will see nothing as inheritance because one parent has Alzheimers and that costs more money than cancer in the end.
     
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  8. Goldhedge

    Goldhedge Modal Operator/Moderator Site Mgr Site Supporter

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    I'd love to have this problem....

    I'd put some in PM's and some in real estate.

    I'd also be looking abroad for investment opportunities in markets that weren't overblown like the DJIA.
     
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  9. pitw

    pitw Gold Member Gold Chaser Site Supporter

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    Another case of someone screwing with their kids life with inheritance.
     
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  10. Mujahideen

    Mujahideen Black Member Midas Member

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    What was dad supposed to do?
     
  11. Joe King

    Joe King Gold Member Gold Chaser

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    Spend it on hokkers 'n blow, duh! lol
     
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  12. pitw

    pitw Gold Member Gold Chaser Site Supporter

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    He could have made less and enjoyed more. Burning it to cook a supper was an option. I've watched too many people screwed over by inheritance, they quit doing for themselves and indulge in shit that don't do anyone any good. When you learn for yourself how to work and prosper then you enjoy it and hold your head high. People also have a tendency to look at you with respect instead of scorn. Just what I see and I've been wrong so many times it doesn't even hurt anymore when I am. I also know I simplify things too much but to me simple is good.
    I see excess's in what people do that just sicken me. Let's look at this fellow who died with an extra 15 million dollars. That equates to what, 12,000 ozs of gold? If he had to carry that with him you can be damb sure he woulda ended up with a lot less. I sure don't want to see the money given to the poor or the govt as neither has any right to it as they never worked for it. Leaving it to charity is kinda dumb as most every charity has it's own leach's.
     
  13. Mujahideen

    Mujahideen Black Member Midas Member

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    I think when you start talking big money, those people are not necessarily working hard or working a lot, they may be working smart, having their money work for them. I think middle class people and the struggling poor who give a damn work the hardest and put in the most hours.

    But jumping to conclusions here, if dad had a financial adviser managing his $15 million and son didn't know what to do with it, it's a sign that they were not close.
     
  14. Silver

    Silver Gold Member Gold Chaser

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    If he inherited 15 million after taxes, Dad had much more - in 2016 the estate tax exemption was 5,450,000. Dad was worth north of 20 million. The kid will be lucky to hold onto it.
     
    Last edited: Apr 2, 2017
  15. latemetal

    latemetal Platinum Bling Platinum Bling

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    My dad left unpaid bills and a ton of IRS forms, he wasted money whenever he could.
     
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  16. edsl48

    edsl48 Silver Member Silver Miner

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    My wife and I now being in our 60s get approached by a lot of financial/retirement planners. Generally what they offer contains an element of life insurance and some assorted load mutual funds offered by the same insurance companies. For the privilege of ll of this their, the advisers, fees seem to be in the 8% area and the load funds charge an additional 5%. Nothing like losing 1/8 of your retirement funds on the spot I always think. Based upon my past experience as a CPA and owner of a residential rental business that I have built my first advice would be to steer clear of many of the so called advisers. Oh to be sure there are some good ones but consider if they had all the answers they would not be selling funds and investments.
    My advice would be to take a look at that John Bogle investment forum (https://www.bogleheads.org/) and follow some of the articles to determine the amount of risk you are willing to accept. Then after doing that make an asset allocation plan that you determine fits your future plans the best. Consider that many of us hold gold and silver as a SHTF insurance policy and not as a "get rich" scheme and that many of us hope that in our lifetime the SHTF will not happen.
    You can do all of this and save the countless fees that will amount to more of your money being invested for you and not in some advisers next vacation trip. Realize that real estate investing is an occupation, not a passive activity. Nothing is easy all in all but giving your money to others that make it sound easy are, imho a waste of money.
     
  17. Dude

    Dude Midas Member Midas Member

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    Plenty of guys leave a few million. Some worked 60-70 hour work weeks during their lives for stretches at times, some for overtime wages, some for advancement, some to grow their business. I'm likey not going to leave my kids and wife with nothing and neither are my parents. My dad still enjoys working his business at half time at 78, still putting away money after his expenses
     
  18. GOLDBRIX

    GOLDBRIX God,Donald Trump,most in GIM2 I Trust. OTHERS-meh Site Supporter Platinum Bling

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    The ultimate goal in life is to Get Money to Work for You. NOT You working for money, that is the enslavement man deals with in this world. - IMO
     
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  19. pitw

    pitw Gold Member Gold Chaser Site Supporter

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    That "ultimate goal" and mine differ a mite, eh. My goal is to keep spraying and seeing my country live until I croak. Even walking back from a broken sprayer is better than being in any building.
     
  20. Hystckndle

    Hystckndle Daguerreotype Fanatic Site Mgr Site Supporter ++

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    True Haystack story,

    Had an " advisor " who I was paying a small amount to check out what I was doing with moms stuff.
    Did not have only 1 either.
    Was trying to have my shite together for 10 to 15 more mom years etc.
    Mom passes.
    And it wasn t like it was 6 months or a year before i sought advice or
    there was an illness either.
    Was seeing those cats for a few years periodically.
    One guy calls me and says " hey lookit , sorry for your loss , come on in and we will talk ".
    So I did. A few months pass...guy calls again...
    Second time , took my wife.
    Guy is on billboards here, radio show, 3 piece suits, big Merc, seminars for public dudes on pension planning....the small advisor group has their own building etc etc. Swanky place.
    Guy gives me the speil of how many people they have helped in times of loss....offers me and the wife a REIT ( apartment rehabbers ) all after we say here is our situation....heres the $ we have and other stuff etc...

    But thats ALL they have really other than a 1% savings account ( old GM capital ) and " the market "....paper...

    Wife says after a few days " ehhh...hows it THEY are better at construction and buildings than you are ( career construction guy ) ? And the guys # s don t match !?

    Guy called next week....we say we ain t ready yet and we are hard asset people.
    All good...he says he will check back in a few months...

    Just after 1st of this new year he calls back...
    Invites Haystack to come in.
    Im like " sure ..we can do that "...
    Guy says " are you ready to do something ? "
    Haystack says " whaddaya getting at ? "
    ( had a relationship with the guy near 5 years..the place is near and I am cool with spinning by there )
    Guyz says " lookit man...if you are not ready to do something then its not worth our time to just sit down and shoot the hay for an hour "....then .....
    He backs up and says " but i will be here for you if you need me "....

    Yupper....flushed that one out....turtle ALWAYS wins...true colors are a bitch...

    Yup...its ALL about them making a cushy living and ALL they can offer is paper.

    Smart kid in op. Its an up market. ALL them guys are "teflon" ....or so they think...
    I d look into ditching them and getting a new set of " advisors ".
    But truly..." f " all them guys...
    Thats what I think today. Parasites and sucker fish all of them but a very few.
    JMHO,
    Regards to all,
    Haystack
     
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  21. Krag

    Krag Planet earth Platinum Bling

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    There are a lot of these spoiled adult children around, protected by psych. doctors, lawyers and other professionals. Children of the robber barons. The wealthy should give their money where it is put to good use, like in foreign poor countries where it goes a long way. Plus this is a result of the tiny taxes the wealthy pay, it ends up paying for frivolous and worthless lifestyles of socialites, butterflys, dodos and ne'er do wells.
     
  22. Joe King

    Joe King Gold Member Gold Chaser

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    While I understand the feeling you express, I gotta ask, how are their taxes tiny? Those earning above $134k already bear nearly 84% of the overall income tax burden.
    ...and if you count those above $80k, it's almost all of it. Everyone below $80k is practically getting a free ride.

    What do you propose a fair percentage would be for the wealthy to pay?


    Tax Share.PNG
     
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  23. Krag

    Krag Planet earth Platinum Bling

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    OK, I was thinking of the superwealthy like scumbag Buffett who pays an effective rate around 15%. Hedge funds and all the tax shelters available.
     
  24. Dude

    Dude Midas Member Midas Member

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    It is frickin' amazing.
     
  25. Joe King

    Joe King Gold Member Gold Chaser

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    Thing is, even if we ganged up on people like that and took all their money, it still wouldn't be enough.
    ...and besides, what's the dollar value on his 15% he pays? If it's anything like Trumps reported $38M that was "leaked" not long ago, I'd say that's way more than enough. Too much, in fact.


    I realize it'll never happen, but the way I see it, everyone should pay the same dollar amount. That way people like Buffet would have no more influence with gov than you or I do.
    ...and it would have the benefit of keeping the gov small with limited power that could only do that which is of most importance. Ie: if there's no huge pool of money, it won't attract the leeches to gov looking to dip their leechy tongues in the punch bowl to slurp up other peoples money.

    What we need is a gov that runs on a shoestring budget.
     
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  26. Joe King

    Joe King Gold Member Gold Chaser

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    Yep, sure is. Yet people still want 'em to pay even more.
    ...and as I told Krag, I can kinda understand the feeling to some degree, because even the 5.9% share that those making between $47k and $80k are paying is still a huge amount of money that amounts to thousands per person paying it. They probably feel as though they are getting ripped off, and I can't say as I blame them because everyone is being ripped off.

    The fact people like Buffet even pay 15% is what really pays for most of what gov does. Well, that and borrowed money. The relative pittance that the average lower and middle class person pays in income tax is pissed away by those in gov faster than they can blink their eyes.

    After all, the fed.gov spends approx $11,416 every 1/10th of a second. How many seconds of gov operation does the average person pay for over the course of their working lifetime?
    ...and think of how much work you gotta do to earn that money, aaaand poof! Just like that, it's gone!


    Edited to add:...and that $38million that Trump was shown to have paid in '05? In todays dollars that doesn't even get ya 6 whole minutes of gov operation. In 2005 it might have been a few more minutes than that, but not much more.
     
    Last edited: Apr 3, 2017
  27. mayhem

    mayhem Rebel Fire Silver Miner Site Supporter

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    We don't really know much here. Were their other children? A wife? The kid's dad sounds like a lot of people my age who lived carefully and saved a few bucks to pass on. Personally I don't understand that reasoning, and there will not be much for my two when we both pass.

    That said we have already given them enough to establish themselves in good careers. Son went into business for himself at 20 and is still at the same business 30 yrs. later, and doing very well. Daughter is doing well 150-200k range in finance. I paid for both of them to get started. I thought it was better to give them a leg up then than to wait for me to croak. They know that there will only be scraps, and neither have a problem with it.

    No doubt some of you are going to make some decisions about what to leave and how much, and will it be wisely looked at. At least that's what I'm reading here.

    Nick. I got even less than that as dear sister managed to get what was there. No hard feelings on my side, as my dad passed on to me knowledge rather than stupid money.
     
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  28. mayhem

    mayhem Rebel Fire Silver Miner Site Supporter

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    A little more thinking about this and I want to say that the kid ought to take 5 years or so and seriously look into what he likes to do and to take a risk at doing something that gives emotional return along with a income. Don't just park the money and allow others to feed off of it. The problem I see is the kid doesn't know what he wants to do yet, and that is partially his late fathers fault.
     

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