Would you help my coworker out?

I got an email the other day from a coworker. One that I am yet to respond to. Mainly, because I don’t know how to respond. Here’s the email…

I was finally going to change around my TSP funds, because it has always been 100% in the G fund, and I remembered talking to you about it once.  I know that you know a lot about finances/investing/etc. and was hoping that you could give me advice as to a better way to have the funds allocated.  Any other TSP advice would be great!

For those that are unfamiliar, the TSP is the federal governments version of a 401K plan. Furthermore, the G Fund referenced is comprised of non-marketable U.S. Treasury securities. Basically, you can expect your money to grow slightly more than inflation. It’s a pretty safe investment, but it  doesn’t allow some of the awesome returns the other funds do.

I’m torn. Part of me wants to tell my coworker how I would invest her money, but the other part of me says “You have no credentials to provide investing advice to acquaintances.” I need to respond to the email so I don’t look like I’m ignoring her. I’m hoping you all can help me with an appropriate reply.

I’ve worked up two possible drafts to respond to my coworker with, please vote on which one you think I should send…

Dear Coworker girl,

Seeing that I am pretty much a baller when it comes to anything financial, it was wise of you to come to me for advice. I seem to know exactly what is best for you and I hope that you will follow my detailed instructions. Seeing that the G Fund is for wussies, yes wussies, I recommend you completely reallocate your contributions. I am a believer that as shoddy as America’s future may seem, we will continue to grow. You should put 50% of your contributions in to a broadly diversified portfolio of stocks of large and medium-sized U.S. companies, 25% in to stocks of small to medium-sized U.S. companies, and the remaining 25% in to international stocks of 21 developed countries. Yes, this is exactly what you should do. And when you are done doing it, you can bake me a bundt cake as a “Thank you” because you will surely become filthy stinkin’ rich.

Peace Up A-Town Down,

Ninja

Or should I send this email….

Dear Coworker girl,

While I am totally flattered you have come to me for help on how to plan for your future, I can’t really give you any investing advice. Simply because I am not qualified. Oh, and because I don’t want you to come sue my a$$ later if things don’t work out as planned. I know our agency has people that could probably put you in touch with some financial advisers. I’d holler at them and talk over any goals and concerns you may have. Best of luck. Oh, and you can bake me a bundt cake if you’d like since I took time to respond to your email 🙂

Hugs not drugs,

Ninja

Alright, those drafts may not be verbatim, but you get the point. I definitely have my opinion on how I think my coworkers should be investing their money, but that doesn’t mean I am qualified to voice that opinion. Would I be overstepping my boundaries to tell her what I’d do? Should I lecture her on rates of return and historical averages? Do I put her in touch with someone “qualified” to make those recommendations? I’m gonna assume if you are reading my blog, you have at least some finance smarts… How do you respond when people ask you for financial advice?

27 thoughts on “Would you help my coworker out?

  1. Ninja,

    I would be flattered but, would strongly steer her to an expert. Once that can is open; you will never get all the worms back in. Basically, help once and they will always come back for more.

    My humble opinion.

  2. Hey, as someone who’s discussed TSP funds and allocations with their coworkers, I think a safe bet would be for you to share how you allocate your funds. Let her know that you’re not advocating her to change anything of her own. Personally, I’ve been putting 100% in L2040 for about 2 years, and I’m satisfied with it.

    • I was going to suggest the same thing… when I started contributing to my TSP, I researched the different investing options and spread my money over three funds… however, if she’s in her 20s, recommending the L2040 is not a bad idea because the lifecycle funds are meant for people who don’t really understand investing or who don’t want to worry about reallocating from time to time… and the L2040 is meant for people in their twenties and have a long ways to go before retirement.

      I don’t think you should tell her how or what to invest in, but you could help her understand the different fund options so that she can make a decision that she is comfortable with.

    • I was also going to suggest this! Telling people what you do is often a good way to give them advice without giving them advice. It gives a useful real life example to work from, without actually telling them what to do.

      I’d also go with suggesting advisors if you know some, so you end up with “Here’s what I do, and here’s some people who can suggest what might be best for you!”

  3. Since she directly asked for you advice I’d suggest like Allen said that “Here’s what I’d do if I was in you situation” approach, but I’m not an expert and you should consult one. Is the best way to go.

    If she does make changes based on any advice you give her and they go wrong, you will never live it down.

    I ran a super bowl pool once at work, will never ever do it again. Out of the 100 boxes there were 4 winners and 96 loser. One of my co-workers who I didn’t really know just complained every time I saw him about losing. Week after, week. Every time I ran into the guy whine, whine, whine. I finally just gave him his cash back out of my own pocket. This was over $10 not a big investment.

  4. I tell people how I invest my own money, but I wouldn’t tell anyone how to invest theirs. If it’s someone at work, I tell them to talk to our financial people and surf the web for ideas.

  5. I would preface with “I am not an expert, but since you are asking….” You can share what you are doing and your thought process behind it, and tell her you would be happy to help her find some resources to find an expert (if you are so inclined). If she pushes the issue….you can always tell her your thoughts, and again…tell her you aren’t an expert!!

  6. I agree with Tom, share how you allocate yours but don’t give her any advice.

    Maybe you could also link her to any articles or blogs that have helped you on your decisions as well

  7. I started working in the mid 90s when the stocks were booming and you pretty much could put your money in any stock and it would go up. Back then, everyone thought they were a financial expert and openly gave me investment advice. (PUT IT ALL IN STOCKS they said and I did).

    Now, I honestly don’t know what the right thing to do is and how conservative I’d be if I were starting out in this day and age. I think I’d still do mostly stocks, but I wouldn’t confidently be telling other people to do the same.

    Good Luck on your answer.

  8. The TSP website has some “brochures” and historical info on it for each of the funds. If she hasn’t looked at that yet, I would start there. Just make sure she knows that the rates of return are historical and aren’t a guarantee. Beyond that, I’d send her to an expert.

    I’m of the opinion that the lifecycle funds are great. I graduated with a BS in financial planning…at first tried allocating based on what I learned while taking those classes, but I was consistently getting outperformed by the L2040. Didn’t take long for me to just jump in the L fund bandwagon.

  9. The first response is def. a winner however I would be sure to mention that I am not a pro and that men tend to be much more aggressive than women when it comes to risk and tolerance. Also strongly suggest she talk to a pro prior to making changes this year.

    Also Nick is on the money. The TSP website is a good start.

  10. Agree with a lot of the comments. If something happens, you’ll never live it down. My Dad told me a story about a year ago regarding a similar situation from years ago…a family friend asked him for advice, he gave a caveat saying they should seek a professional buT did give some advice. Needless to say, they ended up blaming him for them losing a LOT of $$ & unfortunately it ruined the friendship. I’ve given some advice to friends BEFORE I heard my Dad’s story and now I’ll never do it again for fear of backlash. Good luck & let us know what happens!

  11. I think you can definitely give her advice, but I’d frame it as “here’s what I do, it may not be appropriate for you, but it works for me”. Also, don’t put it in writing – that’s how you get sued later. Just wander by her desk or grab lunch one day and give her the download.

  12. I’d be wary of giving her advice — steer her toward an expert or some quality advice online. I’m loathe to even give friends and family financial advice, nevermind co-workers. If nothing else, you can tell her how you invest in the TSP and explain why you do it that way, but otherwise, I’d stay out of it.

  13. Oh so you’ll give us strangers advice but you can’t help out a coworker? 😛 For real, though, I think you could tell her what YOU do, and basically also lead her to someone else who would help, or some websites, etc. That way you’re just telling her what you prefer but still giving her the opportunity to figure it out on her own. In reality, she does need to understand the stuff better herself.

  14. I laugh at the thought that there is such a thing as an “expert” financial planner. I have yet to hear of one. I only know those who claim to be experts and prey on the unsuspecting making huge commissions from shitty investments. Make sure you give her that warning before you send her to the wolves.

  15. I think education is key at first. Instead of TELLING her what to do, why not send her to some sites that discuss asset allocation? They could be mainstream sites or blogs.

  16. I would agree that you would be right to clarify you are not a professional in this area. However, many “professionals” in this area are little more than salespeople on commission, and many people hosting blogs on personal finance have no compunction about posing as “experts.”

    You will gain credibility by pointing this co-worker to sources beyond yourself that confirm the strategies you follow and might recommend. I like Mike Piper’s little books such as “Investing Made Simple,” which will help your friend understand the basics of asset allocation, diversification, expenses, and volatility. There’s a lot of good information at http://www.tsp.gov too that she should read carefully.

    If she’s 100% in the G fund, she might be both risk-adverse by nature but concerned that she’s being too conservative. And I would agree with that 100%, because if she compares her strategy to the lifecycle funds at tsp.gov, she’ll find she’s more conservative than the L Income which is intended for people already in retirement.

    I wouldn’t push her into 50/25/25 Large/Mid-Small/Intl., because that’s too aggressive and might scare her. (I believe there’s a good argumemt for 10-20% fixed income even for people starting out such as Ninjas.) Bottom line, though, is that I think she’d be fine going into the L1040 and just forgetting about it.

  17. Just tell them to go with a life cycle fund; “set it and forget it.”

    For the record though, the G fund is *awesome* because it has the risk of a short-term bond fund but the returns of an intermediate-term bond fund because of it’s holdings and government-backing to never lose value.

    As a federal employee, I consider access to TSP to be one of the primary perks of the job.

  18. I’d say give her advice but keep it general – i.e. something like “you have x number of years until retirement, so if I were in your position I’d have y% in medium risk investments, z% in safe investments, etc. – but it depends on how much risk you can tolerate. If your investment decisions are going to keep you up at night, that’s too risky.”

    I would also mention a quick overview of dollar cost averaging.

    I’d definitely stay away from recommending specific stocks or investment vehicles.

    Steer her to a professional, but give her a background so she knows how to understand the professional.

  19. This is a really interesting and common situation that I’ve dealt with as well. I have some investing experience but have no credentials and people have asked where to invest there money.

    In your situation, I’d do a combo of both. I’d preface it by saying that you are by no means the end all answer to her question and state your lack of financial credentials. And then go on to your recommendation and say “based on my experience and opinion, I would….” And then stress again at the end that you’d suggest at least contacting a professional. I think your coworker would appreciate your input and also the fact that you are being upfront with her about your background. So I guess a combo of your 2 awesome emails!

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