The dilemma: I’m 39, a lawyer, and I got very lucky as the company I worked for over the past 12 years was taken over and I got a substantial payout. Truthfully, this is the first time I’ve had big money (over $1.6 million), and besides paying off the rest of my student loans and buying a new car, I want to invest it and don’t want to make any mistakes. Everyone has an opinion, and many advisors are reaching out, knowing what has transpired with our company.
My fiancée’s family, who are wealthy, use a top guy in the Midwest that my future father-in-law is strongly suggesting I invest with. They trust him and like him, and he’s flown out to see me on this money.
Here’s what is making me uncomfortable, and I want to know if my thinking is correct.
He will charge me 1.5 percent of any money I have with him, not including internal costs. Then he wants to charge me $5,000 to do a financial plan, including selling me insurance, and will charge me $2,500 a year to watch over my plan. He’s more expensive than the other people I’ve spoken with, but my fiancée’s father says he’s worth it as he makes them a lot of money.
The pressure is building from him and the family, and I need answers. It’s not feeling right to me, but I don’t want to put him down or get into a fight with my fiancée, who already is annoyed that I’m not buying us a big home with this windfall.
Meg’s solution: Oh, boy. This could be a great “heads up” as to the dynamics of this new family you’re about to enter, as well as the financial values you and your future wife each come to the table with.
For harmony, they need to be similar. I’m going to advise you to not only keep your personal finances separated, but you must also consider a prenuptial agreement. Your well-earned “windfall” happened while you were young and single, and you want to make sure it’s “premarital” money. It’s enough to make you wealthy forever, if treated responsibly. You get that.
Issue No. 1: I’d gently tell your fiancée that you would prefer to have your own independent and local wealth advisor. This is personal to you, not a family affair, and you’d prefer to keep it as such.
Thank her father and his advisor, but tell them you’re OK. You don’t owe them answers.
When you find an advisor, you should involve your fiancée on the planning side because you both need to be on the same page going into a marriage. She needs to understand why you want to invest instead of scale up; you need to determine whether she can live the lifestyle you can provide.
Issue No. 2: Get that prenup . . . seriously. She has wealth via her family; yours is self-made. You need to have some rules and guidelines just in case. A good family lawyer is who you see, and you need to get this done. This is also a telling exercise that could help you see the future more clearly.
I agree that the advisor your future father-in-law wants you to hire is very expensive. Wouldn’t he offer to bring you in under a family discount?
Most quality advisors to wealthy families have an advisory fee that starts at 1 percent and goes down from there . . . way down for very large accounts.
As for the extra planning fees, I applaud a formal plan to get started, but that should be to get you set up. The fees on investments and commissions on the insurances, complete with ongoing renewal fees, are continuing remuneration.
I believe an advisor should be there, at no additional charge, to counsel and assist the client. In my firm, we call it “value added.” After all, money doesn’t come in the door alone. There are people, families, issues and life to help out with, which is the job of the trusted advisor.
Make sure that the advisor’s personality fits with yours. This is a very personal exercise. Look for someone who understands your thoughts, values and views, and who can guide you according to what you want and need. In my book, pressure shouldn’t go with advice. Interview and get references until you feel that connection. Build your team.
Your brains and instincts got you to this awesome perch. Use them going forward, and always trust your gut.