What should a 19 year old with a moderate inheritance look for in a financial advisor?
This is not about me, but for the step daughter of a friend of mine.
Her parents were divorced, her mother died. She is an only child and getting the assets from the estate. My friend isn't sure how to help her step daughter not "blow" the money.
I suggested maybe she talk to a financial advisor. An unbiased third party that would give good advice, and maybe walk her through what some good options are.
What should I suggest that she look for in a financial advisor? Are there financial advisors that specialize in working with young people that inherited money?
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I think your question is pretty wise, and the comments indicate that you understand the magnitude of the situation.
First off, there could be nothing that your friend could do. Step parent relationships can be strained and this could make it worse, add the age of the girl and grief and he could make this a lot worse then it potentially is. She may spend it all to spite step-dad.
Secondly, there is a need to understand by all involved that personal finance is about 75-90% behavior. Very high income people can wind up bankrupt, and lower income people can end up wealthy. The difference between two people's success or failure often boils down to behavior.
Thirdly, I think you understand that there needs to be a "why", not only a "what" to do. I think that is the real tricky part. There has to be a teaching component along with an okay this is what you should do.
Finding a person will be difficult. First off there is not a lot of money involved. Good financial advisers handle much larger cash positions and this young lady will probably need to spend some of it down. Secondly most FAs are willing to provide a cookie cutter solution to the problem at hand. This will likely leave a bad taste in the daughter's mouth.
If it was me, I would encourage two things:
Pursue an education with good income potential
Don't make any major decisions right now
Both of those things buy time. If she comes out of this with an education in a career field with a 50-60K starting salary, a nice used car, and no student loans that would be okay. I would venture to say mom would be happy.
If she is very savvy, she might be able to come out of this with a down payment on a place of her own; or, if she has education all locked up perhaps purchasing a home for mostly cash.
In the interim period a search for a good teaching FA could occur. Finding such a person could also help you and your friend in addition to the daughter.
Now my own step-daughter and I have a good financial relationship. There are other areas where our relationship can be strained but as far as finances we relate well. We took Financial Peace University (0 offered through many local churches) together when she was at the tender age of 16. The story of "Ben and Arthur" really spoke to her and we have had many subsequent conversations on the matter. That may work in this case.
A youTube video on part of the lesson.
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