Managing Your Parent's Investment Accounts
Taking over investment management requires understanding and careful oversight. Learn how to manage investment accounts responsibly.
If you're managing your parent's investments, here's what you need to know to do it responsibly.
Understanding Their Portfolio
Types of Accounts
- Taxable brokerage: Regular investment accounts
- Traditional IRA: Tax-deferred, taxed on withdrawal
- Roth IRA: Tax-free growth and withdrawals
- 401(k)/403(b): Employer retirement plans
Review Holdings
- List all investments and their purpose
- Understand the asset allocation
- Check for concentration risk
- Review fees and expenses
Age-Appropriate Investing
For seniors, consider:
- Lower risk tolerance than younger investors
- Income generation needs
- Time horizon for various goals
- Maintaining some growth to offset inflation
Working with Financial Advisors
If your parent has an advisor:
- Establish yourself as authorized contact
- Understand fee structure
- Request regular reviews
- Ensure they're acting as a fiduciary
Red Flags to Watch For
- Complex products you can't understand
- High fees or commissions
- Frequent trading (churning)
- Unsuitable investments for their age/risk tolerance
- Pressure to buy certain products
Simplification Strategies
- Consolidate accounts where practical
- Consider target-date funds
- Move to simpler, lower-cost investments
- Reduce number of holdings to what's manageable
If you're unsure, consult a fee-only financial planner who won't earn commissions on recommendations.