A Montreal financial advisor has disappeared with up to $50 million of his clients money. Regulators suspect Earl Jones of Earl Jones Consultant & Administration was running a Ponzi scheme.
Lets take a look at this Canadian “Bernie Madoff” to see if there are any lessons in how to avoid “bad apple” financial advisors. Going over some reports, here is what we find in terms of warnings signs:
- Make sure your advisor is registered with the appropriate regulatory agencies or an industry association that offers an investor protection fund (Jones was not).
- Dont blindly trust anyone with your money. Do your due diligenceeven if the advisor is a friend from high school, a relative, or someone who comes highly recommended.
- Dont give all your assets to one advisor or company.
- Abnormally high or stable returns are a warning flag investments billed as low risk and high return are usually too good to be true
- Dont suspend a skeptical attitude just because an advisor has been in business for over 30 years and is a director on hospital and charity boards.
One last piece of advice .its always a good idea to have your financial statements reviewed periodicallyby knowledgeable third parties.
Montreal Gazette article