You work hard. You scrimp and save. You sacrifice for your
kids. You surely don’t want to
worry about people stealing your money! It sometimes seems like evil financial
doers have mushroomed in our lifetime. Heck, over the last 10 years there has
been a perpetual parade of perpetrators, at least the ones we know about,
including Bernard Madoff, Kenneth Lay, Allen Stanford, Nick Leeson, Marc
Dreier, and Bernard Ebbers. But, as you undoubtedly know, money scammers have
been around for a very long time.

Charles Ponzi, where the “Ponzi” scheme moniker came from,
swindled people out of millions of dollars in 1920. He promised investors a 50
percent return on their money in 90 days! Mr. Ponzi didn’t even invent the Ponzi
scheme, which is when old investors are paid with newer investors’ money since
there is no real investment made. This kind of stuff has been happening for
centuries.

How can you protect yourself from people wanting you to part
with your money rather than protect it?

First of all, no matter who recommends an advisor to you,
you need to check the person out yourself. Do not accept anyone else’s word
when it comes to something as precious as your money. Do some work: Question,
Listen, and Observe.

Ask the advisor to explain to you their investment
philosophy. If he or she ignores the question or talks down to you or in
complex terms, be very concerned. The advisor should be able to explain it to
you in plain English.

If the advisor promises investment returns that sound too
good to be true, then they probably are! And if past returns are consistent
from year to year, be extra concerned since the stock and bond markets are
anything but consistent from year to year.

Never, never ever write a check payable to the individual
advisor directly. Make sure he or she has a custodian firm that manages
clients’ trades, statements, and tax reporting. It is virtually impossible for
an advisor to cook the books if an outside custodian handles the accounting and
paperwork.

Check to see that the advisor is registered with the
Securities and Exchange Commission and ask to see their filing which is called
an ADV Part 2 document. This spells out detailed information about his or her
experience and how they run their business.

Finally, observe the advisor’s personality and lifestyle. Is
she pushy? Does he insist you must buy such and such a product immediately
before it’s too late? Does she talk more about products she has for you than
what your unique objectives, expectations, and constraints are? Can he clearly
explain the investments he is recommending? Does she live a lavish lifestyle?

If your stomach feels the slightest bit queasy through the
interview process, trust your gut! It’s the best red flag-ometer you have!

To encourage readers to take charge and be active in their
financial security, and have a real experience with a professional advisor, I
am offering a thorough asset review for readers who have the best questions
that I can use for my future columns.

• Ellen Le is the
founder and president of Ascend Investment Management (www.ascendinvmgt.com). She
has been a financial planner and investment adviser for more than 20 years.
I look forward to receiving your questions about anything related to
investments, retirement planning, or the economy. Send them to:
[email protected] and write “Chadds Ford Live” in the subject line.

About Ellen Le

Ellen is the Founder and President of Ascend Investment Management. She was born in Philadelphia and has lived in the Delaware Valley for most of her life. When she is not researching investments and managing portfolios, she pursues her interests in tennis, bridge, hiking and art. Beginning her investment career in 1981 as a stockbroker at E.F. Hutton and Co., Ellen now has over 20 years of investment management experience. Prior to founding Ascend in 2006, she managed high net worth assets for many years at Bank of America, Mellon Bank, and most recently at Davidson Capital Management. At Davidson Capital Management, Ellen served as a Senior Vice President and Senior Portfolio Manager of the firm. She managed assets for more than 50 family relationships and was a core member of the firm’s Investment Committee.Ellen earned a BA in History from Brown University and a MBA in Finance & Investments from The George Washington University. She is a member in good standing of the Chartered Financial Analyst (CFA) Institute, which is a global organization dedicated to setting a high ethical standard for the investment profession. Her professional memberships include the Delaware County Estate Planning Council, Women Enhancing Business (WEB), and the Chadds Ford Business Association. She is a docent with the Delaware Art Museum and an active volunteer with the Brown University Alumni Association.

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