I Trusted A Family Member With My Investments (Now He Wants A Cut)

A caller named Dan shares his experience investing $10,000 with his uncle-in-law about two and a half years ago. The money has grown to $15,000 through investments tied mostly to the S&P 500, involving strategies like covered calls. No fee was agreed upon initially, but now the uncle proposes taking 20% (or possibly 25%) of any returns above a 10% hurdle, prompting Dan to seek advice on whether this is reasonable.

Issues with the Family Investment Setup

The hosts immediately flag the arrangement as problematic. The uncle is not a licensed financial advisor or part of a registered firm; he's a 40-year-old DIY investor who tested strategies with his own money before offering to manage others'. He acts as a middleman without formal brokerage like Fidelity or Vanguard, setting it up informally, possibly like an investment club where participants have some input. This lacks professional oversight, and the hosts note it's unclear if it's even legal. Dan admits he doesn't fully understand the covered call approach, which adds risk beyond simple market exposure—the market's strong performance lately explains the growth, not necessarily superior skill.