I don’t think I have to remind you that this post heading is a MYTH. What’s astonishing with the case below is not so much the jaw-dropping audacity of the crook but the carelessness of his victims. Here’s the story, according to an article by Marlene Y. Satter in ThinkAdvisor. (See my Dos & Don’ts afterward.)
Nebaraska Regulator Suspends Omaha Advisor in Annuity Scam
In addition, Bonnett borrowed money from other clients to satisfy his own tax obligations and received numerous checks from other clients for purported sales of various investment products, but had been depositing client checks only to have checks drawn in his own name for withdrawal of funds that were then deposited in his personal accounts and apparently diverted for personal use.
- DO a background check at both brokercheck.finra.org and your state’s financial regulatory website (here is Oregon’s). Ask your adviser for details of any reported events that show up.
- DON’T ever make investment checks or transfer forms payable to your adviser. Sure, fees for service are fine. But not large sums which you are expecting to be reinvested.
- DON’T accept statements produced by your adviser nor mailed from your adviser’s address. Legitimate statements will be issued by verifiable 3rd parties, like Fidelity, Vanguard, American Equity for example.
- DO insist on a contract issued by the company to which you are sending your money.
- DON’T accept statements hand delivered to you by your adviser or his staff. This could mean they are attempting to circumvent mail fraud statutes.
- DO be suspicious of “annuity” payments directly from your adviser. These, too, should come from a verifiable 3rd party, i.e. the annuity company from which you received your contract.
- DO take advantage of all the tools available on the Internet. If you have no computer, smart phone or Internet connection, go to the local library & they’ll be happy to help you.
- And finally, to be fair, DO be wary of negative company reviews. Are they statistically significant? For example, a couple dozen lousy reviews about a company may be concerning. Unless they have 500,000 contract holders.
Your Constructive Comments are Welcome!