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|Subject: Re: Friend for a Financial Planner||Date: 8/28/2000 12:09 PM|
|Author: mcr2||Number: 24407 of 76394|
Interesting question, one I've thought about a long time and had an interntal conflict over. See, my Dad always cautioned me to be careful about doing business with friends because if the deal goes south you have the obvious problem of jeopardizing your friendship.
Then I grew up and became an attorney. Now my Dad uses me for legal advice. Apparently he has no problem with using family members for business.
Actually, I think that he really does trust me. Which leads me to my response to you. Do you really, really, really, trust your friend? If so, what is the problem. Assuming that you do trust him, then I would say you've not nothing to lose. If he is a great friend you can rest assuered that he will do the best he can for you. If your investments go bad, then I'd imagine that the problem is due to things outside of his control because we are assuming that he is person you can trust.
Now, in what way do you trust him. You may trust him to look after you, tell you the truth, give you a fair shake, and not take advantage of you. Believe me, this is a big advantage over having someone who does not know you that well. As an attorney who occasionally does business for friends, I know I naturally pay extra special attention to their business because I don't want to make even a minute mistake that could effect our friendship.
Now, do you trust his ability to handle your financial matters -- that is the big question. Where a lot of friends make mistakes thinking that trust I described in the preceeding paragraph is the same as trust in ability. This is where bad things happen. You give someof your hard earned money to him to take of, he makes an honest mistake because of lack of experience and you are put in a bad position.
If this is the case, here's what I'd suggest if possible. I would give him a modest amount to take of to begin with. That way if he does goof, you aren't out to much. I would also refer as many people as possible to him. This allows you to stengthen your relationship with him by showing 1) you have given good friend some of your money to take care of (showing you do trust him) and 2) you are out there promoting his business. Believe me, as an attorney who is trying to build up clients, I'd rather have a friend that is out there actively (and I mean actively) referring me, than on who is giving just giving me some of their business.
In sum, I think it is wise to use a friend in a situation like this unless you just can't trust them to do a good job. Personally, I'd rather have someone who I know is knocking themselves dead trying to do a good job over someone who might have a slightly better expertise but who I am just "another client" to.
Hope this has helped.
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