21st Oct 2014

A recent Wall Street Journal article caught my eye as it emphasized the importance of the word “fiduciary” in choosing a financial planning “expert.”  The piece did a good job of laying out a number of tips when shopping for a planner — look for the “certified financial planner” (CFP) designation; consider the planner’s pay structure (commission, flat hourly fee and so forth); and encouragement to look at the planner’s Code of Ethics. While credentials, fee structures and ethical standards play very significant roles in the selection process, there is simply no “check list” guarantee of safety.

In our lawsuits representing overreached plaintiffs — mostly senior citizens — the common denominator of trouble is the essential character flaw in the sales person which can be easily masked by credentials. I look at it this way:  Each month the Florida Bar publishes in “The Florida Bar News” the names of lawyers disciplined or disbarred, many of whom have abused the confidence of a client by misappropriating money.  These lawyers are well educated and have passed the bar exam.  They have passed ethical scrutiny and background checks.  And they are guided by a pledge to adhere to our Rules of Professional Conduct.  Still, bad apples emerge.

And so it is with financial planners claiming to be fiduciaries.

The best advice when looking to entrust an advisor with savings:  Kick lots of tires!  Ask for a list of several clients — not just one or two — who have expressed similar goals and financial needs.  And contact each one, not simply to validate the choice you have made of the charming stranger sitting in an impressive office.  Ask friends for recommendations.  Seek the advice of lawyers who specialize in elder law or who have litigated over senior fraud. These specialists are easy to find on the internet and most importantly, they will not be selling you a financial product.

Most states — Florida being one of them — have laws protecting seniors from exploitation and agencies who police financial sales practices.  But keep this in mind:  the state will likely not be able to restore your losses.  It is up to you to take the first steps in protecting yourself.

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