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Dan
So I have some money that a couple years ago I put in with a family member who had some investment stuff that he was doing. And it's not a huge part of like my savings or anything, but it's just a little bit. And I guess it wasn't really worked out in the initial agreement like what his cut of the money was going to be as he managed the investments. And so we're working on that now. And what was mentioned to me was like a 2 and 20 structure with like a 10% hurdle. So like we get the first 10% and then anything above that he would get 20%. But then somebody else mentioned the 25% and to me those are that kind of.
Financial Advisor 1
Is he a financial advisor or is this some back alley deal?
Dan
He's just a family member who talked to some finance people and worked out some investment thing and he's been doing that and making pretty good money.
Financial Advisor 1
He's sketchy all around.
Financial Advisor 2
What kind of investment is it? Is it in the market, like index funds or mutual funds?
Dan
Yes, it's in. Yeah, well it's based on the s and P500 for the most part.
Financial Advisor 1
This is highway robbery. The standard in the industry is around a 1% AUM fee. That's assets under management. Sometimes it's one and a quarter, maybe upwards of two in a crazy scenario. And he wants but 20%?
Dan
Yeah, that's just anything above 10% but like anything above the 10%. Like if we make over 10% profit on the year, he gets 25% though.
Financial Advisor 1
Does he work for an actual like registered investment advisor, like an actual firm? No, you keep saying like. Well, he's got some guys like he's like a middleman and he's. I would get your money away from this guy asap. Who's this family? Is it an actual like a cousin, a brother?
Dan
Yeah. An uncle in law. If he's not like running it through anybody else, he's handled it all himself. But it's just something that.
Financial Advisor 1
Okay, so he's a DIY investor and he's just offering his services to you for a steep fee?
Dan
I mean we haven't really agreed on the fee yet. That's kind of what I'm talking about.
Financial Advisor 1
What happens if he loses all your money?
Dan
I lose that money, but it's not a huge part of my.
Financial Advisor 1
How much are we talking? How much have you given him so far?
Dan
It's only ten grand.
Financial Advisor 2
Okay, so what I would probably do Dan, when did you give him this money to invest?
Dan
About two and a half years ago.
Financial Advisor 2
Okay, how old is he?
Dan
40.
Financial Advisor 2
And does he do this regularly? Like, is this, like, a side.
Dan
He had been working on it with his own money for a while before he, like, opened it up to anybody else.
Financial Advisor 2
And again, it works for him. Is he using, like, a Fidelity or a Vanguard? Like, does he have a brokerage?
Dan
It's through a brokerage. I think it's E Trade, maybe.
Financial Advisor 2
Okay. So it's basically, it's something you could be doing because he's not really moving money around, does he? He just picked an investment and put it in.
Financial Advisor 1
But you'd be better off just doing this with actual professional who's licensed.
Dan
Right.
Financial Advisor 1
Okay, so how much money did you originally put in? Two and a half years ago.
Dan
I put 10 grand in two and a half years ago. It's up to, like, 15 grand now.
Financial Advisor 1
Okay. I was gonna say. I was like, if it's still at 10 grand, this guy needs to go to prison.
Financial Advisor 2
Wait, what?
Financial Advisor 1
I mean, the market has done really well the last few years.
Financial Advisor 2
Yeah. So, number one, I would untangle this whole deal. It's just, you know, the whole money family minutia, it's not. It just never really ends up good. So I would just say, hey, bro, I just want our relationship to be clear of any level of entanglement when it comes to money. I just. I'm starting not to feel great about it. You've done nothing wrong. I freely chose to do this, but I've been, you know, reading some books, doing some stuff, and I just think. Are you married?
Dan
Yes.
Financial Advisor 2
You know, me and, you know my wife, we've been looking at our entire financial picture, and so we're going to kind of consolidate some stuff, move things around. So I probably will just cash out with you, move on. That's what I would do. And not even worry about it. But if you feel like you can't do that and all of it, then I would charge him what the average market rate is. If you had an investment professional look at that, which is 1%, or just
Financial Advisor 1
say, hey, I've got it. I've got. My wife and I, we decided we're going to work with an actual financial advisor at XYZ firm, and we're going to move our money over there.
Financial Advisor 2
Yep.
Financial Advisor 1
And if he gets real upset, that's a good clue that this was a bad idea to begin with.
Dan
Okay.
Financial Advisor 1
But I'm glad you are at least up right now.
Financial Advisor 2
He hasn't embezzled the money is crazy.
Financial Advisor 1
Usually this call ends with. And all the money's gone, and I can't get in touch with him.
Financial Advisor 2
Now, that would be weird. Would that not be crazy, Dan, if you went and told him that sounds like he's just.
Financial Advisor 1
He likes this stuff and he does diy, and he came up with some deal that was like, all right, I'll make a little bit of money to manage this for you. I don't even know if this is legal. That sounds crazy.
Dan
I think it's kind of set up like an investment club type thing. So it's mostly fine. Like, I have input into it, but.
Financial Advisor 2
Yeah, well, why don't you just do it, Dan?
Dan
Well, I don't know exactly what it is. Like, I don't know how to do whatever it is he's doing. He's not just putting it in a stock and leaving it. He's doing, like, some covered call type stuff, I think.
Financial Advisor 1
Oh, boy. Okay, there's. There's some more risk here. I. Personally, I would jump on ramseysolutions.com, click on Smartvestor Pro and you'll sleep better at night knowing that all this money can disappear. Because here's the thing. You could lose it all, and you have no stake in the game. You can't come after him.
Financial Advisor 2
The fact you can't explain what he's doing. Never put your money in something you don't understand. So you gotta figure out what he's doing. So, okay, just for your own sake, Dan, don't give someone ten grand and be like, I don't really understand what he's doing, but he kind of knows what he's doing. You don't know what he know. You don't even know if you know what he's doing.
Financial Advisor 1
Did he make any promise? Promises? Was he like, hey, man, I'll double your money?
Dan
No, no, nothing like that. I mean, he gave up. Like. Yeah. He just said it was doing pretty well for him and he'd been making. I don't remember what the percentage was that he said at the time, but it was a decent amount. And I was like, okay, like, am I gonna put all my money there? But I can put. I have something I can put there.
Financial Advisor 2
Sure.
Dan
It's fine.
Financial Advisor 1
Yeah. Yeah. Well, at least you're not too late. Hopefully we. We talked you off the ledge to get out of this weird situation. And it's always a family member. That's the part that I'm glad. At least it wasn't a whole life insurance thing where he's like he said, he's managing my money. And it's really just a life insurance salesperson who works at Northwestern who sucked you into this deal?
Financial Advisor 2
Totally. Yep. Yeah, it could be totally. Fine. Dan, we may be being dramatic, but from the relational aspect, I would not. Yeah, I just want to commingle money and family.
Financial Advisor 1
I'd rather be a stranger. I can yell at you.
Financial Advisor 2
Just put it in an index fund and you'll probably be getting, I would think, the same returns as what he's doing.
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Episode Title: I Trusted A Family Member With My Investments (Now He Wants A Cut)
Date: May 5, 2026
Podcast: The Ramsey Show Highlights
In this episode, Dan calls in to seek advice about an investment arrangement with a family member who’s managing some of his money. The hosts, Financial Advisor 1 and Financial Advisor 2, dig into the details of the arrangement, raise red flags around informal family investments, explain industry norms, and advise Dan on how to untangle his finances to preserve both his money and relationships. The tone of the conversation is candid, cautionary, and laced with humor around the all-too-familiar perils of mixing family and money.
“This is highway robbery. The standard in the industry is around a 1% AUM fee…” (01:06)
They emphasize that the family member is not a licensed advisor, and his proposed fees are excessive.
“It works for him. Is he using, like, a Fidelity or a Vanguard…?” (02:38)
They confirm that Dan’s family member is just a DIY investor performing trades that Dan could do himself at a fraction of the cost.
“I just want our relationship to be clear of any level of entanglement when it comes to money… I probably will just cash out with you, move on.” (03:35)
“Usually this call ends with. And all the money's gone, and I can't get in touch with him.” (04:33)
“Never put your money in something you don’t understand.” (05:26)
The hosts stress the importance of knowing what’s happening with your investments and never giving money to someone unless you fully grasp the strategy.
“I don’t even know if this is legal. That sounds crazy.” (04:41)
“It’s always a family member. That’s the part that I’m glad—at least it wasn’t a whole life insurance thing…” (06:00, Financial Advisor 1)
“Yeah, it could be totally. Fine. Dan, we may be being dramatic, but from the relational aspect, I would not…commingle money and family.” (06:19)
For more advice on handling your investments and protecting your family relationships, visit ramseysolutions.com and explore resources like SmartVestor Pro.