Date: February 11, 2002
Story Idea
Contact: Ed Long, (310) 533-1996

Two Little Words to Protect Yourself (when hiring a new advisor)
by Edward W. Long, Esq.

Two little words can go a long way to help you protect yourself and your savings when you’re thinking about investment, estate or care planning. Those two words are “Ask First!”

Here’s the scenario: You’ve been contacted by a person who is confident he can provide you solid planning advice. Maybe he gave a talk at the library or your club; maybe he’s a friend of a friend, or a member of your church. In any event, he’s charming, attentive and seems to know what he’s talking about.

You’ve progressed along to the point where you’re having your first private meeting. You settle down for a cup of coffee. He brings out his colorful planning package, leans forward and starts his presentation.

Now is the time when you courteously “Ask First!” When you ask about his credentials, and about how he makes his living.

Why do you do this? Because unfortunately a growing number of unqualified or dishonest individuals are masquerading as expert planning advisors. Many of them provide sub-standard services or have hidden financial motives in providing their “planning services.”

Not long ago, the California Attorney General cracked down on one company that was giving estate planning advice, and selling living trusts to older adults in California. According to the Attorney General’s Office, the company would offer to provide a living trust at an economical price. As part of the planning, the company’s “planning professional” would find out all about an older adult’s finances and investments. Then the older adult would be pushed to sell their existing investments, and buy annuities. Annuities can generate significant up-front commissions for the seller, and over $200,000,000 of annuities were sold this way. In many cases, the charming planning professional didn’t even get paid for selling the trust – he was only paid if he sold an annuity.

Other groups have seen the financial success of the trust-annuity sales gimmick, and adopted it as their model. Others are using a slightly different approach – they offer advice on long-term care planning, including Medi-Cal. Their underlying motivation, however, is still to sell annuities or other financial products.

These events point out the need to know, in advance, if an advisor has legitimate professional credentials, and how the advisor earns his living. If the advisor has no real training, or if the advisor tells you he’s there to help with your planning but he actually makes his living selling financial products, you’ve been warned. Do not do business with this advisor!

So how do you know in advance about credentials and how the advisor gets paid? You “Ask First!” The easiest way to do this is to use the free one-page “Ask First!” form created by H.E.L.P. By asking the advisor to complete this form, you are asking the advisor to disclose in writing his credentials and ways of being paid. If the advisor won’t complete the form – find another advisor! If the advisor does complete the form, use the answers to check out the advisor’s credentials, and to check with the licensing agencies for any record of complaints or sanctions. If the advisor’s answers don’t “check out,” or they surprise you or otherwise make you uncomfortable – find another advisor. If the advisor gives false answers, you have written evidence to use against him.

Keep a copy of the “Ask First!” form handy. Protect yourself and your savings. Remember those two little words: “Ask First!”

The “Ask First!” form is available for free download at:  www.help4srs.org/articles/askfirst.htm

Ed Long is Executive Director and Staff Attorney for H.E.L.P. H.E.L.P. is a Torrance, California-based non-profit service for older adults and their caring families and friends. It helps people meet aging-related legal and care challenges, through classes and private consultations. Telephone and Internet assistance is also available. Since its inception in 1996, it has helped thousands of older adults, family members and friends. Almost all services are free. H.E.L.P. is located at 1404 Cravens Avenue, Torrance, California 90501. The phone number is (310) 533-1996, and the Internet address is www.help4srs.org