Protecting Yourself from Financial Fraud

  By Martin Weisberg
Martin Weisberg

A recent survey showed that 60% of CERTIFIED FINANCIAL PLANNER™ professionals know a victim of fraud or abuse. In another survey, a majority of people without a current advisor who wanted financial advice did not know who they could trust.

To be sure, everyone wants an advisor they can trust. Unfortunately, just because someone claims to be credentialed or claims to be retired military or claims to be trustworthy does not guarantee they are. People typically take it on faith that the advisor is who he or she claims to be, that the credentials on their business card are legitimate. Unfortunately, this is sometimes not the case.

The Certified Financial Planner Board of Standards has published a Consumer Guide to Financial Self-Defense. It contains useful tips that bear consideration by anyone seeking financial advice. For example:

  1. Ask your advisor if they provide services with the “duty of care of a fiduciary.” This obligates them to base their recommendations on your best interests. It also requires them to disclose conflicts of interest. If the advisor you are talking to avoids the question or doesn’t understand the term, go elsewhere.
  1. Trust but verify. You can’t board a plane without verifying your identity and passing security checks. With your very livelihood and future security at stake, you can’t afford to hire a financial advisor without a background check.
  1. Ask your financial advisor to identify the organizations that license or supervise them. For example:
  • Investment brokers are regulated by FINRA.
  • Investment advisors are regulated by either the SEC or a state securities regulator.
  • Insurance agents are regulated by the state insurance commission.
  • CERTIFIED FINANCIAL PLANNER™ professionals are regulated by the CFP Board.

Use these organizations’ websites to check the advisor’s background and disciplinary history, if any. Read the Consumer Guide to Financial Self-Defense.

Finding a qualified advisor you can trust may help you prepare for and maintain a secure retirement. Sound advice may improve the probability you can retain your independence and dignity.

For more insight, listen to Jentner Wealth Management’s weekly podcast by clicking here. Or download Jentner’s newest white papers on The Four Cornerstones of Prudent Investing and The Active Versus Passive Investing Debate.