>Trust broken, savings gone

>News – Trust broken, savings gone – print version

I’ve been reporting on a ponzi scheme that happened up in Central and Northern California on my Teachers Advocate blog for some time now (http://teachersadvocate.blogspot.com), but it appears that tragedy has hit closer to home, this time in San Juan Capistrano.

Jeffrey Gordon Butler swindled nearly $15 million from investors, mainly seniors by promising high returns and using low cost Will & Trust services to gain access to seniors with money.

This is truly a sad case as over a hundred people have lost much of their life savings. A client of mine asked what was to stop me from doing the same thing, so I thought I’d lay out a few things that you can do to protect yourself.

1.) Verify that the person is licensed to do what he or she does. In this case a simple call to the National Association of Securities Dealers (www.nasdr.com), to the state insurance commissioners office, or the state department of corporations would have revealed that this individual was a fraud. Another way to verify this is by going to the Securities and Exchange Public website www.advisorinfo.sec.gov and searching for the individual or firms name. For example, if you put in my firms name (Meridian Wealth Management), my firm comes up and provides a complete disclosure.

2.) Verify credentials. This individual didn’t have credential, but many planners do. You should first check out to see if the credential means anything (did they earn it over the weekend) and then verify that the individual holds that credential in good standing. I am a Certified Financial Planning Practitioner, or CFP and you can goto www.cfp-board.org and search on my name and find out that I am in good standing.

3.) You should get statements from a known entity, not statements made solely by the advisor. I produce my own client statements, but they are in addition to the statements that come from Ameritrade and TIAA-CREF – two companies that are well known. This prevents the advisor from having control of the money and commingling your money with his. You can call the provider up at any time and verify that the money is in the accounts and you can go online and check it out. In addition, these firms typically have huge insurance policies that protect your money from fraud by the firm.

4.) Never hesitate to ask lots of questions, a good advisor has nothing to hide.

5.) If it sounds too good to be true…….well, you know.

6.) Never make a check out directly to the individual or his/her firm (unless it is to pay a fee), only make checks out to the Brokerage firm or insurance company.

That should be enough to raise red flags, don’t let fraud happen to you. Your advisor should be an open door and have no problem disclosing everything.

Scott Dauenhauer, CFP, MSFP

Kindle

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