How do I know that my financial advisor is trustworthy?

Hello. My name is Ron Blue, there’s been a lot of coverage recently to an unbelievably big Ponzi scheme - a $50 billion Ponzi scheme. You know, I’ve been in this business for a long, long time, and this is not the first Ponzi scheme I’ve seen; it seems like they come around pretty regularly, but this is by far the biggest one that we have experienced in our economy.

Not everybody understands what a Ponzi scheme is. It’s basically where someone brings in money, promising a return, and then they give the return to their investors but the only way that they get the return is not through legitimate investing but by their ability to raise more money. So they promise a return, they get your money, they give that money and say that it’s an economic return or an interest rate return or investment return over here to someone else. It’s a Ponzi scheme. There really is not money there, it’s just flowing through to the investor.

What can you do to avoid getting caught up in something like that? First of all, who is the investor accountable to? The big problem on this particular scheme and in most of them is there is no real accountability for the investor. This investor had nobody that he was accountable to. He had total authority to do anything with these people’s money. That’s not good counsel to give someone total authority on your money. What you need to do is to look for counselors who share your value system. And, I would suggest this: I would suggest that you interview more than one investment counselor when you get ready to seek an investment counselor. There’s an organization, Kingdom Advisors, which qualifies Christian financial advisors, putting them through training and a qualification process. You can find a Christian financial advisors in your area by going on to that website www.KingdomAdvisors.org and putting in your zip code and you’ll find an advisor who has been trained and who is qualified close to you. But I still say interview more than one advisor. You don’t always have a personality match with an advisor. It may be that you want somebody young, maybe you want somebody old. Maybe you want a man; maybe you want a woman. Make sure you know what the criteria are you are looking for in an advisor. And, shop around. When you get investment advice, it’s ok to check it out with someone else and ask him or her what they think about this particular investment. And, I would say this also, just because someone is a Christian, does not make him or her a good investment counselor. Just because someone is a Christian does not make him or her a good airplane pilot. There are certain skills that come with various professions. So don’t just trust somebody just because they are a believer or they purport to be a believer. Some of the worst Ponzi schemes have occurred in the church because people trusted somebody in a way that they should not have trusted them. They gave them total authority. Because they were a believer, they believed everything that they said. You can’t do that. And I would say this lastly: before you make any investment, pray about it. Pray about it, ask someone else for his or her wisdom before you make those investments. That’s probably the best way to avoid the schemes. There will be another scheme tomorrow. There will be another scheme a month from now. There will be another scheme a year from now. Some of them will be in the church; some of them will be on Wall Street. But, God has promised to give you discernment. And, I would say: ask for it.


Click here for the January 15, 2009 Blog Entry