Every so often the media uncorks some financial scandal that shakes the business world. Lately, it seems like we’ve had plenty of them. It started with the Enron scandal in the early 2000s, then the Madoff scandal, and most recently it’s Rhonda Breard, a wealth manager in Seattle’s own backyard, making dubious headlines. As you may have heard, Breard pleaded guilty in federal court to stealing over $9 million from her clients over the course of several years.
News of such misconduct both angers and saddens us as wealth managers. Our priority is to help our clients live life without the anxiety and complexity that accompanies wealth. Unfortunately, scandals like Breard’s can plant seeds of doubt and undermine peace of mind.
After talking with my team, we think this is an opportune time to remind our readers of a few key safety measures that should be in place to preserve and protect your assets:
Make sure your statements are sent directly to you from the custodian. Advisor generated reports showing performance, balances, and positions must reconcile to the custodian’s, not replace them.
Separation of duties is a key detriment to fraud occurring. At least two sets of eyes across departments see all of the activity that occurs in our accounts. Different people in our office are responsible for executing account activity and for reconciling it.
Understand the insurance coverage carried by your custodian and advisor. Your brokerage assets are protected from loss by SIPC, and from both fraud and error by insurance carried by your custodians. We have also chosen to carry insurance coverage that would help protect our client’s in the unlikely event of a loss.
For more information about consumer protection, please visit our blog video gallery at: http://www.wealthclarityblog.com/about/video-gallery.