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Aunt's retirement money

September 17th, 2009 at 06:10 am

So, my mom did something unique yesterday. She let me see one of my aunt's retirement account letters. She wanted me to tell her what it meant and whether it was something my aunt needed to worry about.

The letter turned out to be nothing more than a regular update statement. However, what kind of worried me was the asset allocation. There are only two mutual funds in the account. One I think is a large cap growth, and the other is a mid cap growth.

I asked my mom if she knew what other money my aunt had, because this account was only $10k total, and being in their early 60's readying for retirement, surely there had to be more money. Unfortunately, my mom didn't know.

So, with no other details to go on, I tried to explain to my mom that having 100% stock mutual funds is really risky for people in their 60's, and suggested that my aunt sell the mid cap and buy a bond fund instead.

Of course, that's hardly an ideal asset allocation, but with my broken Chinese and their lack of interest and understanding with the investment world, well, it was the easiest thing I could think of.

Another interesting detail is that my aunt has the same investment "advisor" as my mother. It would seem that my family is making referrals to each other, and the only qualification they looked for is someone who spoke Chinese.

Now, don't get me wrong. I'm OK with that, because when it comes to something like this, it's good to have someone who can explain it to you in your native tongue. However, this is one of those companies that charge massive 5% front loads, and ER is something like 1.5%-ish!

I'm not going to be able to talk them out of who they are investing with, but at the very least, I was actually complimented that my mom would trust me enough to look at my aunt's statement.

Anyway, I hope they all experience smooth sailing into retirement.

7 Responses to “Aunt's retirement money”

  1. LuxLiving Says:

    Had similar convo last night with Hubster's sister - calling for advice. Her risk aversion is not in line with her current allocation and trying to talk to her about how selling now locks in her losses and whether she's willing to live with that or hope for some future recovery (who can tell you what to do? No-one. You have to go with your own gut there) and trying to talk to her about directing new monies invested into a more conservative asset allocation as she is ultra-conservative and VERY risk averse. For all my talk about still needing to be leary of INFLATION risk, I don't know if it did any good at all!

    Hopefully something you said sunk in BA! I don't WANT to be my s-i-l's advisor, as I think it could be a thankless position, on the other hand you don't want them to end up destitute either.

  2. Nika Says:

    She has got to have more money than that, and she probably has that invested concervatively -- few rental houses, and cash in a safety deposit box?(Stereotyping here, hehe).

    She also may be expecting to live with one of her children and be supported by them.

    I would probably leave that 10K where they are, if these funds are not underpreforming. I mean she already paid the load, and 10K at the age of 60 will not change the big picture either way.

  3. Broken Arrow Says:

    Yeah, I know they've bought a house here, and until she moves down, she's renting that house out....

    They also own their own small business where they work right now, which I am pretty sure they will sell once they retire.

    Beyond that, I don't know what else they have, but I am certain that whatever it is, my mom was explicit that they don't really want to mess with this investment stuff. That's why they went with this "advisor". Considering that they're not going to touch it, I think it's appropriate enough to change one of the funds to a bond fund.

  4. baselle Says:

    Unless you know more, with only 10K, it could be that that's the risky account to balance out the super risk adverse ones.

    Have to tell you that you are sitting on a business opportunity here - brush up on your Chinese, jump the hurdles to become a fee-based financial planner, and get your family's immediate circle into Vanguard funds, you could be a hero. You wouldn't have to convince anybody, just appeal to their frugality. Big Grin

  5. Broken Arrow Says:

    Hahaha, don't you know it baselle. I've been trying to convince my parents of letting me handle their retirement account for literally years now. Considering that they even trust me enough for them to let me see someone else's account is way more than I could ever expect.

    I don't know. I think there is a certain comfort level and rapport they've developed with this particular financial advisor. Even if they are paying more. And to them, I'm family, but I'm no professional like this advisor.

    Plus, it's already quite arrogant of me to speak out like the way I have been. In Asian families, a child (even an adult) who speaks as though they know better than their elders is considered rude and arrogant. In a way, it also shows the level of open-mindedness and progressiveness on my parents' part that they would even consider what I have to say.

    Yeah, I know it seems a bit odd, but that's Asian culture for you. But remember, you're talking about a culture where my grandfather named all of us grandkids, not my parents, and my grandfather TOLD my father what he's going to do for his career when he grows up. That's the traditional norm.

    But yeah, if I have my way-- and I hopefully will some day-- I would be more than happy to manage all of their retirement money. And I'm not just saying it to cover my own butt Big Grin but really, it's the least a son can do for his own parents.

  6. zetta Says:

    Seriously, you find investing so interesing, have you ever thought of making a career change to become a CFP or investment advisor? I think you might really have a good angle with your Chinese language skills...

  7. Broken Arrow Says:

    Hehe, thanks Zetta, for saying so. Dunno, will see....

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