Erin: Jordan, So good to see you. We are diving into the headlines again today with this question. How do you know your advisor is working for you? I’m asking because of this incredible story out of Georgia, where a financial advisor recently pleaded guilty to one of the largest Ponzi schemes in the state’s history, defrauding more than 2,000 investors out of roughly three hundred and eighty million dollars. So, what are the key signs that a financial advisor is acting in their client’s best interest, and how does the fiduciary standard play into that?
Jordan: Yeah, so I think you got to make sure that you do your due diligence. Make sure they’re licensed and make sure they have a good record. Um, you know, you kind of just make sure that you examine the firm. Also, make sure they have a third-party custodian.
In this situation and some of these others, people wrote a check to that firm and they kind of played around with the books and that Ponzi scheme. We ourselves, we use Charles Schwab. You have 24-7 kind of reporting. You get monthly statements. You don’t want to leave things up to chance. Make sure you have a third-party custodian as a safety net. Do your due diligence.
And another thing I want to overlay on that is make sure they work for you, not the big-box firm. A lot of people also, you know, they try to put people in investments and products and don’t hold up to that fiduciary standard. I would say an independent fiduciary is someone that really works for you and doesn’t care what products or investments they choose. That’s usually the most aligned to benefit the most people. Where we have advisors that have come from these other firms and they just want to push them into this product or that product, but that may not be the best for the client. So that independence, that fiduciary standard, those are key. Also making sure of that third-party custodian.
Erin: Right. Got to do your homework. On that note, in light of this Ponzi scheme, what questions should investors ask when evaluating the credibility and trustworthiness of a prospective advisor?
Jordan: Yeah, they got to ask those questions [like]:
“Where are you licensed at?”, like I mentioned earlier,
“Where’s your custodian?”
“What kind of products do you offer?”
“Do you get extra incentive by putting you in these products?”
“Do they have higher expense ratios than other products?”
You got to ask these questions. And again, if you’re interviewing someone, we’re happy to help join and ask those questions to who you’re currently with or who you’re interviewing. And we can be very clear and transparent on what we do and how we make a living. But you got to ask questions, and you got to know the right questions to ask. A lot of people are confused, and they don’t know what questions to ask. We want to make sure that you’re educated, and you ask the right questions so that you’re not blindsided or caught into a Ponzi scheme like we saw earlier.
Erin: Yeah, you bring up a lot of really good points there. How should an investor interpret promised returns, especially when someone uses the word guaranteed or promotes consistently high returns?
Jordan: You should have some scrutiny there. You should question that. You should challenge that. And if it doesn’t feel right, it’s probably not right. For myself personally, our firm and our advisors, we don’t say guaranteed returns unless it’s maybe a CD or a fixed rate product or maybe guaranteed income. But you and I and no one can control the market. We can talk about the risk versus reward. We can tell you the possible outcomes and the risk you’re taking, but we can’t guarantee an outcome unless it’s a fixed product. So, if someone says that it sounds too good to be true, it usually is. Don’t get caught up in the silver, you know, silver spoon or silver object there. Make sure you do your due diligence. Maybe pull back and make sure that you have a well-rounded conversation. Or look at maybe two or three other different advisors and make sure things line up. Because if they don’t line up, don’t get yourself in a bad situation.
Erin: Right, right. Yeah. And getting a second opinion is key. Glad you brought that up. Transparency is also, of course crucial. So how often should clients expect performance reports and updates?
Jordan: Yeah. One I think that the transparency should be 24/7 that they can log in and see things. I don’t want clients to log in every single day, because they should be enjoying life and doing the things that they love to do. But we have a client service model for our clients that at least once a quarter, we reach out to them. We have different quarters for kind of formal annual reviews, some for tax planning, some for estate planning, some for insurance reviews and Medicare.
So, we have different times throughout the calendar year, but we also are always available to take questions. And when life changes, and if you lose a spouse or if something happens, you get an inheritance or whatever may come. We want to make sure that you reach out to us because we can’t read minds, and we’re happy to give you that financial leadership and guidance that you deserve. But we’re available 24/7; maybe not the weekends, but nine to five Monday through Friday as well as we have a proactive service calendar.
True story—literally, I had someone with seven million dollars. They weren’t a client at the time, and they asked me, “Should my advisor be reaching out to me, or is it normal that he calls me back after three days?”
And I was like, that should be the baseline.
Thankfully, they’re now a client of ours, but I couldn’t believe there was such a lack of service and proactiveness—especially for a seven-million-dollar client. It just baffles me. But I think those are things—not just what you should expect—but what you deserve and should be looking for.
Erin: Absolutely. Wow. That’s crazy. All right. Last, if an investor suspects that something is off, what are the practical steps they should take immediately to protect their assets and get clarity?
Jordan: Yeah. They should reach out to that advisor, make sure that they, you know, pick up the phone. If they don’t, they should reach out to their custodian. They should reach out to maybe a different federal agency if they need to. If they’re going through a situation right now, need guidance, they can reach out to us and we can maybe give them that financial leadership and guidance on who to reach out to, but just don’t sit on the sidelines. You need to be proactive and reach out to make sure you find out what’s going on, why it’s going on. And sadly, is this industry. There is some bad people out there like we opened up with, and that gives us a little bit of a headwind for people not trusting. But there’s a lot of good advisors out there that truly care about you and want to help you, and hopefully they can help guide you to the outcome that you deserve.
Erin: And who are ready to take on the hard work to earn that trust.
Jordan: Yes, trust is earned and it takes a lot of time to build, and you can lose it very quickly. So, you know, we are an independent firm. We believe in that kind of family relationship that we want to hang out with our clients on Friday nights and do business with them and do life with them. But we want to make sure that we earn that trust every single day and never lose it.
Erin: Right. Well, Jordan, like you mentioned, if somebody would like to come to you for a second opinion or if they have questions about how they’re invested and want to talk about a financial plan, what’s the best way to reach you?
Jordan: Yeah. If their situation could be better, you know, would they want it to be? And if that’s a yes, give us a call at 847-499-3454. We’d love to give you some more confidence and clarity in your financial future.
Erin: Great. Jordan, thank you.
Jordan: Thanks, Erin.
