September 21, 2010

CFP Board Releases Financial Self-Defense Guide

Guide has red flags for investors to watch for when dealing with advisors

The CFP Board, in observation of the second anniversary of the financial crisis, on Tuesday released a consumer guide to financial self-defense. Joined by the National Football League Players Association and GSA at the release, the CFP Board is making the guide available for download on its website. GSA will include the guide in its winter 2011 catalog, which will be available in November 2010, and the NFLPA will distribute the guide as part of its financial advisory service, as well as promote it among players.

Written by the CFP Board's consumer advocate Eleanor Blayney, the guide presents 10 red flags consumers should be aware of when they seek to choose or work with a financial advisor. Subtitled "What You Must Know and Do to Prevent Financial Abuse," the guide details warning signs taken from actual situations in which a consumer had been taken advantage of by a financial advisor; these situations were reported in a survey by CFP professionals.

Among the "red flags" to beware of, the guide cites the person a consumer has known "forever," but has not asked to provide documentation of professional standing or checked out references; an advisor who fills out paperwork for a client with incorrect information, or who asks a client to sign and says he'll fill in the blanks later; the advisor who offers too-good-to-be-true investments; and the advisor who pressures a client into making a decision right away.

Other warning signs are detailed in the guide, as well as resources to help consumers research anyone they are considering hiring as a financial advisor. In the wake of Bernie Madoff, this should be a welcome addition to everyone's library.

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