How do you convince a parent in their 60s without a large portfolio (less than 300k) that they don’t need a CFP? Late to the investment game, don’t want to do daily/weekly monitoring, and are worried about expenses, thus they want to go the CFP route but I’m trying to tell them CFPs and Wealthfront/Schwab/Fidelity aren’t going to do anything drastically different. It’s probably an age/trust thing or maybe I’m wrong and a CFP is the route to go at their age/portfolio size. Thoughts?

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I don’t think you should try to convince them.

Is using a CFP the best solution? Hell no. Are their after fee returns going to be better? Almost certainly not.

Are they going to sleep easier and be happier knowing they have a CFP making recommendations? Yes.

So optimizing for utility rather than returns, their use of a CFP is probably for the best.

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Both tbh. But luckily they can opt out anytime so I told them it’s fine to get that initial recommendation that will be personalized to their needs but then stop using the service and just manage on their own.

I went through this recently. I had always offered to help. They had a manger that they liked. I never pushed it because I could tell I was annoying them. It is their money and they can do what they want. They were not getting charged and AUM fee which was good but there was a percentage of each transaction. Finally when they sold their house I explained it was going to cost them a lot to invest the money. They talked to the manager and he verified that. I also asked them about their investments and said they did not make sense. They talked to the manager and he agreed but said he did not want to change anything because it would cost them. So all in all the manager was trying to help them but was not really doing anything. I explained they could manage everything themselves at fidelity or somewhere similar for no fees. They moved everything there and I manage it. The risk is that if the market tanks, they will likely blame me. So if you are giving them advice, be very careful because it could blow up on you and affect your relationship. Sometimes it may be better to just stay out of the way. Up to you what you and they are comfortable with.

See the CFP they’re considering is charging a high fee plus a very high AUM fee (like my parents qualify for a different bucket with a lower AUM fee, yet this CFP is recommending they move money into emergency fund so that they qualify for the lower tier with a higher AUM fee which I’m like mmmm that seems sketchy and not in your best interest).

And to your point, that’s what I’m trying to tell them. When the market tanks, a CFP will do the same exact thing Fidelity, Wealthfront, etc. will do for them. I’m not trying to offer myself to manage their money because I think they’re smart enough and have acquired enough knowledge over the year talking to so many different CFPs/researching to do it on their own. But I understand too they may also blame me if I advise them away from it.

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