How to Avoid Financial Scamsters

2010-11-14T10:35:00.000-08:00

Ken Fisher spells out how to spot people like Madoff on page 45 of his excellent new book, Debunkery.

"1. Your advisor also has custody of your assets--this is true in 100% of the cases.
"2. Stated returns are consistently great--almost too great to be true. Also true in 100% of the cases.
"3. The investing strategy is murky, flashy, or too complicated for the advisor to explain to you so you can understand it--almost always.
"4. The advisor promotes himself (or herself, though the rats are usually male) as an 'exclusive' club, or otherwise distracts you with flash, bling, and connections--none of which have anything to do with investing.
"5. You hired the advisor based on a recommendation or through an intermediary and didn't do any real due diligence yourself. Con artists hate anyone who does real due diligence and avoid them."

I especially like #1 above.

On a local note, in February 2010, Bob Markman chose to end his life when his scheme caught up with him. I remember his radio talk shows from a decade ago. He always promoted himself as the icon of ethical financial dealings. Unlike Madoff, most of his investors weren't wiped out, and he directed his life insurance proceeds to be distributed to the people who were affected.

Senior Opinion

How to Avoid Financial Scamsters