DIAHANN LASSUS ON HOW TO MONITOR YOUR FINANCIAL ADVISOR

Client Confidence in the Wake of the Advisor Fraud Allegations in Massachusetts

Newspapers and television reports across New England have been full of accounts of the alleged activities of financial advisor Bradford C. Bleidt in the past few weeks. Mr. Bleidt is alleged to have defrauded his clients of more than $100 million over the past 20 years, and to have concealed his actions by taking money from new clients to cover his thefts from old clients.

 Fraud by financial advisors is exceedingly rare. Nonetheless, the tragic losses by Mr. Bleidt’s clients are undoubtedly making other people wonder if their financial advisor is acting in their best interest. The National Association of Personal Financial Advisors (NAPFA) offers the following advice about how to protect yourself as you work with a financial advisor.

• Know where your money is. Whether your advisor is managing your money or you are the person who signs-off on each financial decision, an independent financial institution will hold your money. This company has “custody” of your money. Make sure you know which company it is; how to contact the company, and what your account numbers are.
• Read your financial statements. The firm that has custody, typically a broker/dealer, bank or trust company (known as the “custodian firm”) is required to provide you with at least quarterly financial statements. Read them. Most importantly, make sure that these statements are coming to you directly from your custodian firm – not from your advisor. In the case of Mr. Bleidt, the government alleges that he had the custodian firm’s financial statements sent to him instead of his clients, and then he created fictitious financial statements that he sent to his clients.
• Stay in contact with your advisor. Visit with your advisor at least annually, and stay in contact by e-mail or telephone. If your advisor is vague or evasive, ask for more information. Holding these regular meetings has the added benefit of making sure that you and your advisor are clear about your financial goals, risk tolerance, and investment strategy. In fact, poor communication between client and advisor is a more common source of dissatisfaction than any type of illegal activity.

 “Having a financial advisor, even a person with great credentials, is no substitute for devoting some attention to your personal finances. It’s your money, so you need to remain involved,” said Diahann W. Lassus, CFP^®, CPA, a NAPFA-Registered Financial Advisor with Lassus Wherley, a firm located in New Providence, NJ and Naples, FL.

 Consumers need to be aware of situations in which their advisor is not proactively placing the good of the client above all else. “I see the negative impact on a client when an advisor has not put the client’s interests first, or in other words, not taken fiduciary responsibility,” said Lassus. “This isn’t illegal – but it’s a practice NAPFA finds troublesome. That’s why every year each NAPFA member signs a fiduciary oath, committing to act in good faith and in the best interest of the client.”

 Many financial advisors, such as those who work for large financial services companies, have a fiduciary obligation to their employer, not to their respective clients. NAPFA members are different; they do not accept commissions or any type of third-party compensation for providing financial advice.

 “When seeking a financial advisor, you should find out if they are willing to sign a fiduciary oath putting your interests above those of their employer,” said Lassus.

 For more information about the nation’s leading organization of Fee-Only comprehensive financial advisors visit www.napfa.org or call 800-366-2732. Or, reach Diahann W. Lassus at (908) 464-0102 in New Jersey or (239) 643-0406 in Florida.

Lassus Wherley & Associates is a wealth management firm with offices in New Providence, New Jersey and Naples, Florida, providing  fee-only comprehensive financial services, including financial planning, investment management, tax, trust and family office services. The Lassus Wherley web site is www.lassuswherley.com.

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