At the end of 2024, a relative asked me for financial help. She was planning to leave her expensive money management firm at Goldman Sachs Asset Management, where she was being charged close to\u00a01.5% in fees\u00a0and placed in a series of esoteric GS funds that charged another\u00a01\u20132%.<\/p>\n
I\u2019m not a fan of double-dipping, so I stepped in and offered to help manage her portfolios. She had four accounts total: a taxable brokerage account<\/a>, two traditional IRAs, and a Roth IRA<\/a>. Even though my plate was full managing over ten of my own family\u2019s investment accounts, I knew I could help her save, and potentially earn, more money.<\/p>\n With about\u00a0$2.3 million\u00a0in assets, she was paying about\u00a0$30,000 a year\u00a0in fees alone. By reconstructing her portfolios into low-cost ETFs with an agreed-upon target allocation based on her risk tolerance<\/a>, spending needs, and goals, I knew I could save her a lot of money.<\/p>\n Ultimately, I decided to manage her $1.2 million taxable account and her IRA with $800,000 for a total of $2 million. She would let Fidelity manage her other IRA and Roth IRA worth about $300,000.<\/p>\n Through this year-long process of trying to help, I was reminded about a big deficiency about myself. And through this discovery, I am grateful and plan on improving. In addition, this article is about the difficulty of wanting to help someone when you\u2019re burned out.<\/p>\n But first, let me share some practical guidance when deciding whether to pay an investment management fee. <\/p>\n The Fees You Pay Relative to Your Income Matter<\/p>\n I\u2019m okay with someone paying a money manager if they don’t understand investing, have zero time, or receive incredible value-added services such as estate planning or tax strategy. But I\u2019m not okay with high fees (over 1%) when your income doesn\u2019t support it.<\/p>\n As someone in her late-50s with an unstable\u00a0$35,000 \u2013 $45,000 annual income from part-time, paying more than\u00a0100% of her annual income\u00a0in management fees is outrageous.<\/p>\n Yes, on one hand she is fortunate to have a relatively large investment portfolio. But there must be a reasonable limit to how much someone should pay in fees relative to what they earn.<\/p>\n I\u2019m setting that limit at\u00a010% of income, with the preferred target below\u00a05%. In other words, she should be earning at least\u00a0$300,000\u00a0a year, and preferably\u00a0$600,000 a year, to justify paying\u00a0$30,000\u2013$50,000\u00a0annually in fees.<\/p>\n The problem is that income often goes down or disappears as you get older, especially if you stepped out of the workforce to raise children. And once you retire, you lose your active income<\/a> entirely. <\/p>\n Most people earn less in retirement than while working, which is why the urgency to aggressively fund a Roth IRA through regular or backdoor contributions is often misguided.<\/p>\n Sure, fund a Roth during low-income years. But if you\u2019re already in the\u00a024% federal marginal bracket, it\u2019s generally a wash. And if you\u2019re in a higher tax bracket, the Roth is unlikely to be beneficial.<\/p>\n The Financial Results After One Year of Money Management<\/p>\n At 58, with a\u00a0~$45,000 income\u00a0and\u00a0$100,000 annual spending\u00a0in an expensive city, we decided on a\u00a060\/40 stock\/bond allocation\u00a0for her retirement accounts and a slightly more conservative\u00a055\/45\u00a0split for her taxable account.<\/p>\n With such a large monthly deficit, I didn\u2019t think it was wise to be more aggressive. She was withdrawing about $5,000 a month to cover her expenses.<\/p>\n Despite the income and expense issues, I didn\u2019t have the heart to force her to downgrade apartments to save $1,000 \u2013$2,000 a month. I wanted to see if I could help her maintain her lifestyle for at least another year, especially since I was positive on the markets. And by saving her $30,000 in fees, I essentially more than offset the rent savings anyway.<\/p>\n When the year 2025 ended, the accounts I managed were up about 12%, exceeding the historical\u00a08.4%\u00a0average return<\/a> of a 60\/40 portfolio. Meanwhile, her Fidelity-managed accounts closed\u00a0up about 7.2%.<\/p>\n In other words, I outperformed her advisor by almost\u00a05 percentage points.<\/p>\n Take 5% of $2 million and you get\u00a0$100,000. Add in the $30,000 she saved in fees and the combined value-add is roughly\u00a0$130,000\u00a0in one year.<\/p>\n With an income of $35,000 \u2013 $45,000, I essentially generated\u00a03 \u2013 3.7 years of income\u00a0for her. When it comes to investing, I also like to calculate how much time is saved or gained with investment returns<\/a>.<\/p>\n If anyone did this for me for free, I would be extremely grateful. I\u2019d express verbal appreciation, send gifts, treat them to meals, pay for their vacation, something. <\/p>\n After a year, managing the money of someone you know takes a far greater emotional toll than I had anticipated.<\/p>\n No Voluntary Appreciation or Acknowledgment<\/p>\n Unfortunately, the only time my relative reached out was during the April 2025 tariff meltdown, asking what she should do. I was already stressed from losing lots of money across my own accounts, which feels especially painful with a stay-at-home spouse and two young kids depending on me.<\/p>\n The 60\/40 portfolio<\/a> I set up helped her lose about\u00a0half\u00a0as much as the S&P 500 when it was tanking in March\/April 2025 (-8.6% vs -19%. When it comes to managing money, outperforming by just 1% is considered a big win.<\/p>\n But since she is not knowledgeable about investing, which is why she hired help in the first place, she didn\u2019t appreciate the asset allocation decision and instead focused on the downturn. Afterward, when markets recovered, I reduced her equity exposure to 55\/45 so she could feel less afraid and I could feel less pressure. <\/p>\n Throughout the year, I provided occasional updates. Before the November correction, I showed her the accounts were up 12% and outperforming by about 5%. She seemed appreciative.<\/p>\n But when the market corrected about ~6% in November, I casually mentioned during a conversation that I was feeling more stressed than usual because some of my growth stocks<\/a> were down over 15%. <\/p>\n I thought we’d have a nice conversation about the stock market, my efforts to help her, and seeing the bright side of things. That didn’t quite happen. <\/p>\n Indifference About My Own Struggles<\/p>\n Instead of empathizing with my stress and losses, she said:\u201cWhy are you stressed? Aren\u2019t you supposed to just invest for the long term and everything will be fine?\u201d<\/p>\n Ah, if turning off emotions when losing lots of money was so easy. I said, \u201cYes, that\u2019s the philosophy. But I\u2019m still human. Managing money\u00a0can\u00a0feel like a full-time job<\/a>, and I feel pressure to perform for you and for my family.\u201d<\/p>\n Managing $2+ million adds real stress. One mistake could meaningfully affect her lifestyle given she earns relatively little. So I have been carrying this responsibility silently all year. She is, of course, right about being a long-term investor.<\/p>\n After hearing my response, she got a little defensive and explained why she had asked the question. Fair enough, but I was already beaten down emotionally.<\/p>\n My Decision To Cut Ties<\/p>\n I said, \u201cI\u2019d just like some acknowledgment for the work I\u2019ve done. Outperforming by 5% doesn\u2019t happen by accident. It takes diligence, constant monitoring, and experience. I don\u2019t think you realize what it takes.\u201d<\/p>\n Then I added, \u201cIf you truly feel no emotion during downturns, that\u2019s actually a great trait for investing. So it might be logical for you to manage your own money in the future.\u201d<\/p>\n She wasn\u2019t pleased, and fired back, \u201cI\u2019ve noticed you seem to need a lot of acknowledgment.\u201d She referenced two unrelated instances where I expressed disappointment when someone close to me didn\u2019t appreciate something I had done. I guess I should have kept my displeasure to myself.<\/p>\n That was the breaking point.<\/p>\n Instead of simply saying \u201cThank you,\u201d she implied I was needy. That might be true. But that’s not something I wanted to hear in the moment.<\/p>\n Wanting acknowledgment for a job well done seems normal. If you outperform at work and your boss never recognizes you, yet only checks in when things go badly, you\u2019d feel terrible.<\/p>\n But to my relative, my desire for acknowledgment made me weak. So I fired myself.<\/p>\n Oh, How Nice It Is to Be Free<\/p>\n I told her, \u201cYou\u2019re right. Maybe I need more acknowledgment than most people. I\u2019ll work on intrinsic motivation<\/a> instead of seeking recognition from others.\u201d<\/p>\n And she agreed. <\/p>\n I thanked her for the opportunity to help, but told her I needed to reduce my mental load. 2025 was a stressful year<\/a> due to three rental property turnovers, an in-law unit remodel<\/a>, the launch of Millionaire Milestones<\/a>, and all the responsibilities that come with being a father.<\/p>\n Eventually, my relative did express appreciation. She said she was lucky to have my help. Later, she even sent me a wonderful piece of art which she hand made. I was thankful. <\/p>\n But by then, we had already agreed I would no longer manage her money. My shared access to her accounts were already removed.<\/p>\n Saying Thank You Once in a While Goes a Long Way<\/p>\n I do feel bad she\u2019ll now pay around\u00a0$25,000 a year\u00a0in fees with her brokerage, if she goes that route. Luckily, before we parted ways, I gave her some guidance and adjusted her portfolio to match her current risk tolerance and financial situation. <\/p>\n So she’s going to self manage for now and ask me for advice when needed. I’m totally open to sharing my thoughts whenever she wants.<\/p>\n But even if she does hire an institution to manage her money again, she is also the type of person who genuinely benefits from hiring a financial professional<\/a>. Finance is a completely different world to her.<\/p>\n In retrospect, if she had just said \u201cthank you\u201d and empathized when I was feeling down, I would\u2019ve continued to manage her money for free. But that is now in the past.<\/p>\n Silver Linings And The Things We\u2019ve Learned<\/p>\n Despite everything, I\u2019m glad I went through this experience.<\/p>\n My relative is about\u00a0$130,000 wealthier\u00a0as a result. That\u2019s enough to cover six years of wealth management fees if she decides to go that route, or a year of living expenses.<\/p>\n More importantly, we now understand each other better, which ultimately means a better relationship. She wasn\u2019t failing to acknowledge my work out of ungratefulness or entitlement. She simply didn\u2019t realize how much her portfolio had outperformed or the effort I was putting in behind the scenes to help it do so.<\/p>\n As for me, I learned that if I\u2019m going to do something for someone, I should keep them updated along the way. Otherwise, how are they supposed to know what\u2019s being done on their behalf? Everyone is busy with their own lives.<\/p>\n I also learned that I\u2019m too sensitive about feeling invisible. This may be a result of always moving around every 2-4 years as a kid, adapting to a new school while my parents worked full-time jobs for the foreign service. Then again, I purposely don\u2019t seek the spotlight because I value freedom and privacy.<\/p>\n I tend to take things too personally and sometimes quit too soon as a result. This tendency was evident when I negotiated a severance package<\/a> and left finance for good in 2012 at age 34 partly because I felt I didn\u2019t get the raise and promotion that I deserved. Now that I\u2019m 48, I realize how young 34 really was to walk away. If I could speak to my younger self, I\u2019d tell him to tough it out for another five years.<\/p>\n I saw the same tendency again when I quit a part-time consulting role<\/a> in early 2024 after just four months. The flexibility was great, and the extra income was nice, especially when I exhausted most of my liquidity buying a house. But I couldn\u2019t handle being told what to do in my own craft any longer. In reality, most people would have kept going. Criticism and occasional micromanagement come with the territory.<\/p>\n Finally, I learned that I will\u00a0never manage someone else\u2019s money for free again<\/a>. The mental stress, especially during times of volatility, is too taxing. I feel much worse losing other people\u2018s money than my own. Money and family often don\u2019t mix, despite our best intentions.<\/p>\n Managing Money Can Be Hard Work<\/p>\n I know that as DIY investors<\/a> who love investing mostly in index ETFs, many of us don\u2019t want to pay any more in fees than necessary. However, after going through this experience for a year, I can unequivocally say that money managers deserve to be compensated. A lot goes on behind the scenes to help clients lose less money and earn more money in a risk-appropriate way.<\/p>\n Whether the right management fee is\u00a00.1% or 1%\u00a0is up to prospective clients and the owners of money management businesses to decide. But charging over 1% and then layering additional fund fees on top of that is not something I support.<\/p>\n Personally, I\u2019m happy to provide financial guidance on a\u00a0fee-only basis. I do so once or twice a month with long-time readers, which is rewarding for both parties. Here’s my personal finance consulting page<\/a> if interested, as I do have a promotion going on through May. But when it comes to constantly managing other people\u2019s money, I\u2019m going to pass.<\/p>\n Helping people growth their wealth is fulfilling. Being responsible for it every day is a different story.<\/p>\n Reader Questions & Suggestions<\/p>\n Why do we not thank the people who help us along the way? How can we raise the issue of feeling underappreciated \u2013 at work, with friends, or with loved ones \u2013 without damaging the relationship? If you\u2019ve volunteered to manage money for a relative or loved one for free, how did that go?<\/p>\n Each month, I go to the post office to send out signed copies of my USA Today bestseller,\u00a0Millionaire Milestones<\/a>. If you’re interested in participating in this promotion, you can sign up for a free financial consultation with Empower<\/a>. Read about my experience and the instructions in\u00a0this post<\/a>.<\/p>\n","protected":false},"excerpt":{"rendered":"At the end of 2024, a relative asked me for financial help. She was planning to leave her…\n","protected":false},"author":2,"featured_media":336041,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[14],"tags":[138,246,111,139,69,244,245],"class_list":["post-336040","post","type-post","status-publish","format-standard","has-post-thumbnail","category-personal-finance","tag-business","tag-finance","tag-new-zealand","tag-newzealand","tag-nz","tag-personal-finance","tag-personalfinance"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/336040","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/comments?post=336040"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/336040\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media\/336041"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media?parent=336040"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/categories?post=336040"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/tags?post=336040"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}