I believe the heading of this post is a myth because it's more like every second that a fool is born. Take the Utah case of American Pension Services Inc. and its CEO (Crook Ex-Officio) Curtis DeYoung. This succinct article in The Trust Advisor magazine drives home the importance of receiving your account statements from a fully vetted third party, not from your adviser. That third party should be a well-known and independent custodian or trustee.
According to the SEC, Mr. DeYoung lost over $22 million of retirement account assets, all the while sending his clients phony, inflated account statements. And then, to top it off, he charged fees based upon the fake account values, even after they were totally worthless!
One might argue that this is a case of just desserts, since both Utah's senators voted against Dodd-Frank & its consumer protection provisions, including adequate funding for the SEC. But nobody in Utah deserved this, despite voting for Mike Lee & Orrin Hatch.
We had a similar case here in Oregon with our own Wes Rhodes. Talk about a whole bagful of warnings that investors ignored. Entrusted with upwards of $40 million, Rhodes actually invested only about $4 mil. using the rest to pay off earlier investors and fund his lavish lifestyle. His $1.6 mil. car collection was quite public and well-known yet set off no red flags. To avoid Federal mail fraud charges, he hand delivered his phoney statements to his clients' homes, a service they found endearing. Rhodes is currently serving 10 years in Texas.
My exasperated question is this: Why are investors attracted to $1000 suits, expensive cars, offices, Persian rugs & secretaries who look like Vogue models? Who do you think is paying for all that?? Do you really believe the guy is simply a market genius, benevolently sharing his golden touch with you? This delusional thinking is how Bernie Madoff executed the grandest heist in history, fleecing otherwise wealthy, sophisticated investors.
That is why I dress casually, work from home, drive a Leaf, utilize virtual back office services and a national network of other experts and support systems. This keeps my overhead low. I am walking my talk, that costs matter. What kind of message does it send to squander money on fluff and bling?
THE TAKEAWAY: If your statements are coming straight from your adviser, run in the opposite direction. Be sure to grab your money first.