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Wednesday, December 15th, 2004
Hello Everyone!
Welcome to the inaugural issue of "Behind the Headlines." Everyday we're inundated with information and it's often difficult to pinpoint how much of it applies to our own situation. In the spirit of education and money-empowerment, we've created "Behind the Headlines" to expand on, explain and make relevant some of the money information that effects you.
You're receiving this first edition as a friend of Compass Planning and we hope you'll find it helpful. If you prefer not to receive future issues, you may unsubscribe by clicking the link below.
We welcome your feedback. If you have a question or an issue you'd like to suggest for a future edition, please email us at headlines@compassplanning.com.
Thanks, Jennifer Lane CFP
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Behind the Headlines with Jennifer Lane
This issue: Protecting Your Wealth
* What can we learn from the Brad Bleidt scandal?
* How can I be sure my own investments are appropriately handled?
* What safeguards does Compass Planning use?
What can we learn from the Brad Bleidt scandal?
Brad Bleidt, a certified financial planner, has admitted to bilking 140 of his clients of approximately $20 million over a 20-year period. Brad enjoyed high visibility with his business radio station (bought with his clients' embezzled funds, according to taped confessions) and had established a reputation as a charismatic, persuasive professional in the Greater Boston community. But the man stole $20 million from his clients and friends and left his investors holding the bag! Millions of dollars have been lost because people who invested with Bleidt trusted his judgment without question.
How did this happen?
More details about the case are becoming public everyday, but so far it seems that Bleidt violated some very basic industry practices and ignored state and federal regulations in handling some of his clients money. He told clients to write their deposit checks to him (violation #1) and he created false account statements (violation #2) to make it appear that he had invested their money. For clients who wanted to draw a monthly cash flow from their investments, Bleidt issued checks from his own account (violation #3). The applecart was upset when one of his clients requested an unusual withdrawal of more money than Bleidt could cover.
How can I be sure my own investments are appropriately handled? First, check out your broker or registered investment advisor on the web site www.nasd.com, a source for credible background and licensing information. Next, look at the practices of your broker or registered investment advisor to make certain that:
* Your checks are issued to the brokerage firm, not an individual.
* Your account statements come from that brokerage firm on their letterhead and you have independent confirmation, like a web site or 800 customer service number, of the balance in your account
* Checks issued to you come directly from the brokerage firm.
Read and understand…
Look for and carefully read the ADV form issued yearly from your investment advisor. This explains how their business is structured and how they make their money, their educational background and work experience, and the history of the business. Additionally, the accompanying document, Schedule F, describes how the business is run. This is not gobbledygook that you can safely discard. It is critical information, required by law, and meant to safeguard your wealth. Don't offload this important responsibility!
What safeguards does Compass Planning use?
My personal commitment is to educate and empower people about their money, as we serve in the role of interested third party. Compass Planning has no direct contact with clients' money and we gain no compensation from anyone other than from the investor. Our clients decide how they want to pay for our expertise - flat fee or by the hour - and this is always clarified up front. As part of our ongoing effort to educate and empower clients, we've rejected doing financial planning "by the pound" which involves generating pages and pages of reports that only serve to confuse and overwhelm the client with information. Our focus is on providing clear, straightforward reports and information that is simple and to-the-point. The work papers we use in our regular meetings are meant to help educate our clients and guide them toward making the best financial decisions for themselves. I welcome questions from clients about my own expertise, experience, and the rationale for my advice. It's yet one more way for me to help people to avoid "dark corners" about money.
Happy Holidays
--- Jennifer Lane
Compass Planning -- Committed to educating and empowering our clients
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