Don't Ignore Your Gut when Picking a Financial Advisor

As much as it is about weeding out the bad guys and the poor fits, you should go into your search confident that the vast majority of advisors are fair, competent, honest, and anxious to do the right thing.

That's why choosing a planner is like mixing art and science. The science is the investment and money-management work, the art is that "good fit" between you and an advisor.

As you come to know an advisor, you should also recognize changes in the relationship and in his or her persona. You never want to be fooled for being too trusting.

A number of Brad Bleidt's victims -- he was the Boston advisor who ran a $20 million Ponzi scheme -- told me they saw changes in Brad's behavior as his crisis was coming to a head.
It was his demeanor, a sense of pressure they had never felt before, and more, but they wondered if he was all right; in hindsight, they should have been wondering whether their investments were all right.

Gregg Rennie, a financial planner who was a primary sponsor for my "Your Money" radio show in 2007-2008, clearly went through some issues that changed his demeanor. He had passed every test -- complete background checks, an interview, and more -- and I had seen his presentations to groups, which were impressive. I could see why someone would want to work with the guy.

When he started to have business and personal finance problems, he backed away from the show, so I never gave it a second thought. His clients, however, might have wanted to put things together, because somewhere during his dark period he allegedly turned to fraud to make ends meet. He may have been meaning to put the money back on account -- many Ponzi schemes start just that way -- but his actions had turned criminal; his clients were in the dark until charges were filed and were mostly lucky that his first bad turn with an investor generated the complaint that brought him down. It might have been worse -- with many other clients taken in -- had the deception gone on longer.

It proved, again, that while due diligence and background checks and everything prescribed in these articles will root out the guys with a past that runs from bad service to theft, it can't stop you from being victimized by the person who "goes bad" once he has you as a client.

Keep that in mind. Over time, your advisor should become a confidant and trusted friend. If something seems amiss, ask questions. Put your feelings aside for a moment and take stock in where you stand, and to know that the information you have been given is real and backed by your actual dollars and not just by a paper statement.

Smart Investor Tip

Over time, your advisor should become a confidant and trusted friend. If you don't have that feeling, something's wrong.

It's like those times where you leave the house and wonder if you have your wallet and find yourself suddenly patting yourself down to make sure it's in a pocket somewhere.

When all of the questions and credentials and forms are out of the way, your gut and intuition will still play a big role in finding the right advisor and protecting yourself against the potential betrayal that is a client's worst nightmare.
By Chuck Jaffe
Chuck Jaffe is a senior columnist and host of two weekly podcasts at MarkWatch. He has also been a guest speaker on several television and radio shows.

Copyrighted 2020. Content published with author's permission.

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