Episode #72: Calling Out Advisor Fraud (And How to Avoid It)

What Is Advisor Fraud?

Advisor fraud happens when a financial professional abuses your trust for their own gain. This could mean stealing money, making trades without your permission, or lying about returns on investments.

It’s more common than you might think.

One example: A former Morgan Stanley advisor was caught moving over $5 million between client accounts and sending over $2 million in checks to himself and his family. He made over 100 transactions without permission, all to fund his personal lifestyle.

That’s what we’re talking about here—real harm done to real people.

---

Real Examples That Should Make You Pause

Here are just a few more real cases of advisor fraud:

Name	Company	Fraud Amount	What They Did
Barry Connell	Morgan Stanley	$5M+	Unauthorized transfers
Isaiah Goodman	MassMutual	$2.25M	Stole from clients for personal use
Dawn Bennett & Associates	DJBennett	$20M	Ponzi scheme using fake notes
James McDonald	Hercules Investments	$3.6M	Spent client money on cars and rent
Michael Welsh	Wells Fargo	$3M+	Used blank forms to move money to family

These aren’t no-name advisors. They worked at well-known companies. One even appeared on national TV. The takeaway? Don’t assume a big brand means you’re safe.

Don’t Be Fooled by the Flash

Every one of these advisors had something in common: they used client money to fund a flashy lifestyle—cars, watches, expensive homes.

Here’s the truth:

• • Anyone can lease a Mercedes.

• • Anyone can wear a luxury watch on payment.

• • A nice office doesn’t mean honest advice.

There’s nothing wrong with having nice things. But those things don’t make someone smarter or more trustworthy. Don’t let looks fool you.

The Problem With the ‘Fiduciary’ Label

Another thing they all had in common? They were fiduciaries.

That word gets thrown around a lot, but here’s what it really means: a fiduciary is supposed to act in your best interest.

Sounds good. But there’s no “fiduciary police” going around checking who follows the rules. So, just because someone says they’re a fiduciary doesn’t mean they won’t take advantage of you.

If you’re wondering, “Is this person going to rip me off?”—you’re not alone. That’s the real question most people are trying to ask.

What to Look for in a Real Advisor

So if the nice office and “fiduciary” title don’t mean much, what should you actually look for?

Here’s what you’ll find online:

1. 1. Check their credentials – Use FINRA’s BrokerCheck or the SEC’s advisor search.

1. 1. Look for reputable companies – Choose someone linked to a known firm.

1. 1. Interview multiple advisors – Ask about fees, investment style, and background.

That’s solid advice—but only the third one really helps.

The first two? By the time anything bad shows up on those sites, it’s already too late. And plenty of bad advisors work at big-name firms.

The best thing you can do is talk to more than one person. Ask your questions. Listen to how they answer. And go with your gut.

🚩Red Flags That Could Signal Fraud

Here are clear warning signs you should never ignore:

Red Flags to Watch Out For

• • You’re asked to sign blank forms
    Never do this. There is no good reason, ever.
    

• • They promise high, unrealistic returns
    If it sounds too good to be true, it probably is.

• • They avoid questions about costs or transactions
    Good advisors are transparent. Bad ones get vague.

• • They don’t use a third-party custodian
    Your money should be held at a well-known firm like:
    
    • • Charles Schwab
    • • Fidelity
    • • Edward Jones
    • • Raymond James

If someone wants to hold your money themselves? Walk away.  No, run!

How to Stay Vigilant Once You’ve Chosen an Advisor

Even if you trust your advisor, stay alert. Here’s how to keep your money safe:

• • Check your account online regularly (not just quarterly statements)

• • Get written confirmation for all decisions
    

• • Be careful with “discretionary authority”
    This allows the advisor to make trades or move funds without asking you first.

• • Watch for pressure tactics
    A good advisor won’t rush you or cold-call you with “hot deals.”

• • Report concerns to FINRA or the SEC
    You won’t get in trouble for asking questions or raising a red flag.

You don’t need to be paranoid, but you should stay informed and involved.

Tips for Vetting an Annuity Advisor

Looking at annuities specifically? You’ll want to do a few more things:

• • Check their license on your state’s Department of Insurance website.

• • Never send money directly to the advisor — ever.

• • Get the full annuity illustration
    If you see “Page 3 of 19,” ask for the rest.

• • Ask for disclosure or statements of understanding before applying.

• • Call the annuity company
    Ask if the product exists and if the advisor is in good standing.

• • Ask for client reviews
    Trustpilot or similar review sites can be helpful.

And again—trust your gut. If something feels off, it probably is.

Always Understand What You’re Investing In

You don’t need to become a financial expert, but you should have a good understanding of what you’re putting your money into.

Ask for:

• • A copy of the disclosure form

• • The full brochure from the annuity company

• • A clear explanation of how it works

And don’t forget—between YouTube and Google, you can learn just about anything these days. Use those tools.

Want to Learn More About Annuities? Start Here

If you want to learn more about how annuities work—and how they can help you spend more in retirement—check out our free video series, “20% More Spendable Income in Retirement.” It’s a great place to start if you want to:

• • Understand the basics

• • Compare options with confidence

• • Avoid making costly mistakes

And when you’re ready to talk, just use my online calendar to schedule a quick call.

All the best,

Marty Becker

Podcast Episode #72: Calling Out Advisor Fraud

Download Episode #72: Calling Out Advisor Fraud on Apple Podcast