What follows is an excerpt of a press release from NAPFA that I think is very relevant for investors out there:
How to Monitor Your Financial Advisor
Madoff case adds to lack of investor confidence in financial services industry and increases the need for the Securities and Exchange Commission to proactively protect investors
ARLINGTON HEIGHTS, IL (December 16, 2008) – Bernard Madoff’s Ponzi Scheme, which allegedly helped defraud investors of $50 billion, is the latest example of how the financial services industry fails to protect those they serve. The market chaos coupled with this case and apparent inability of the Securities and Exchange Commission (SEC) to monitor large financial businesses highlights the intensifying need for tougher regulation.
Until this regulation is in place and agencies in place are cracking down on unethical, fraudulent practices, investors must take the necessary precautions to ensure they are not at risk. The National Association of Personal Financial Advisors (NAPFA) offers the following advice on 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 monthly or quarterly 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 and most will provide them monthly. Read them. Most importantly, make sure that these statements are coming to you directly from your custodian firm – not from your advisor.
See the rest of the press release…
Posted by moneynuggets 