The problem is that you both want different things and you may get your hopes up by being friends instead of lovers. He has the goal of developing a relationship with his daughter and you have the hope that there is a relationship with you and him. That can lead to hurt feelings for both you but especially you. Sometimes women stay in friendships because they think the relationship will return to romantic. But what happens is that the guy sees you as a friend and only maintains contact under these circumstances. I don't want to see anyone get their feelings hurt and this may be that kind of situation. If you maintain this friendship then you take the chance that he will never move from being a friend. The question is do you want to take that chance or just break the ties now. It is better to have had this conversation without others around but are you hoping for more when he is not. When you say you will be happy together does that mean that you want a future as sexual partners. You can structure this friendship as something positive but in the end you want to be together. You have to be aware that you don't want to be really friends so it worth the risk.
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