Where are the advisers checks and balances?
The most glaring red flag in the Madoff scandal was the lack of checks and balances. Mr. Madoff’s clients wrote checks and wired money to, and received statements from, Bernard L. Madoff Securities. The operation’s auditing firm, Friehling & Horowitz, had only one licensed accountant and was operating out of a storefront in New City, N.Y. Madoff investors relied on this firm to verify the authenticity of trades, the SEC said in a complaint. When purchasing investments, make sure you are writing checks to a third-party custodian, like Fidelity Investments Co. or Charles Schwab & Co., not to your financial adviser directly. This way, “an adviser can make purchase decisions based upon my instruction, but they can’t run away with my money,” says Wealth Management Exchange’s Mr. Cooper. Call the independent institution to verify it’s serving your adviser, and never send checks anywhere but that firm’s business address. What’s more, don’t allow your transaction confirmations and account stat
