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FOR IMMEDIATE RELEASE
Paladin Registry Says Friendly Financial Advisors are a Major Source of Investment Risk
SACRAMENTO, CA, January 21, 2009 – A recent Paladin Registry ( www.paladinregistry.com) study showed Ponzi investment scams have a common characteristic. The people behind the scams develop personal relationships with investors to create trust, gain control of assets, and generate referrals to other victims for their illegal products.
Jack Waymire, co-founder of Paladin Registry and author of ‘Who’s Watching Your Money? The 17 Paladin Principles for Selecting a Financial Advisor (ISBN 0471476994, John Wiley & Sons, 2003)’ said, “Investors create substantial risk when they select advisors because they like them. That’s because they really don’t know if they hired competent, ethical advisors who put their interests first.”
This deceptive sales tactic was a primary characteristic of the Madoff Securities ($50 billion of losses) and Forte, LLP ($50 million of losses) Ponzi schemes. Daniel Hawke, Director of the SEC’s Philadelphia Regional Office said, “Forte engaged in lies and deception at the expense of innocent investors, many of whom considered themselves his friends and close acquaintances. Forte promised outrageous returns and because of his relationships with investors was able to lull them into trusting him with their funds.”
Waymire added, “The source of investor vulnerability was their belief that people they liked would not take advantage of them for money. What they failed to realize was financial advisors want to be liked for three reasons. First, investors tend to trust people they like. Second, trust makes it easy for unethical advisors to sell bad products. And, third, investors are more tolerant of bad results when they like their advisors.”
Fortunately, Madoff and Forte’s illegal Ponzi schemes are relatively rare. However, bad advice from incompetent or unethical advisors is far more destructive because it impacts more investors. Just ask the millions of investors who lost more than the stock market since October, 2007.
About Paladin Registry
Founded in 2003, Paladin is an information services company that provides free public services to investors who use the services of Certified Financial Planners, financial advisors, financial planners, money managers, fee-only financial advisors, CPAs, estate attorneys, and insurance professionals. Visit http://www.paladinregistry.com or http://www.findanexpert.com to learn more.
Contact:
Pam Ivaldi
Paladin Registries & Directories, Inc.
pam@paladinregistry.com
916.408.5131 |
