View the full transcription of this episode here.
About This Episode
In this episode of GDS Unplugged, Glen Smith and Robert Casey open a candid conversation most investors rarely hear in plain English: how to protect yourself from adviser fraud, from the subtle red flags to the urgent steps to take if you suspect something’s wrong.
It’s a practical, no‑nonsense guide grounded in decades of experience and recent real‑world headlines. The goal isn’t to make you fearful; it’s to make you prepared.
Why This Conversation Matters
Financial fraud doesn’t just happen in movies and documentaries. It happens in quiet ways, paper statements that never quite match what you’re told, money movements you didn’t green‑light, or “can’t‑miss” returns that sound reassuringly steady… until they aren’t.
As Glen puts it, many victims later say, “I knew in my gut something wasn’t right.” Trust that instinct. Listen to your intuition. When the numbers or the story don’t add up, that’s a signal to slow down and verify.
Beyond High Fees: How Bad Actors Actually Do Harm
This episode draws a firm line: we’re not just talking about high fees or lousy products. We’re talking about the rare but real scenarios where money is misappropriated, or performance is fabricated. Think notorious Ponzi schemes with “too‑smooth” returns, or modern cases where an adviser misuses authority to move funds a client never approved.
Two patterns show up again and again:
- Control the statements, control the story. When the person “advising” you also creates the account statements (or your assets sit where they control custody and reporting), it’s easier to conceal reality. Independent, qualified custodians are a first line of defense.
- Promise consistency the market can’t deliver. Reasonable long‑term equity returns can average in the high single digits over time, but no legitimate strategy delivers that like clockwork every single year with no down periods. A smooth, “never negative” line is a red flag, not a comfort.
The Red Flags You Shouldn’t Ignore
Use this as a quick, practical checklist:
- No independent custodian. Your investments should be held by a legitimate, third‑party custodian who produces their own statements. Trustworthy custodians you can consider include Raymond James, who GDS Wealth Mangement partners with, Charles Schwab, and Fidelity Investments. If your adviser is the one “holding” your assets, or controlling the audit trail, move cautiously.
- Authority to withdraw funds. Be extremely careful granting any power of attorney or withdrawal authority to an adviser. If money needs to move, you should be the one to approve it, in writing, with a clear paper trail.
- “Guaranteed” returns or low‑risk/high‑return promises. Markets carry risk. If someone’s pitching equity‑like returns with “less risk than the market” and little downside, there’s risk you’re not being told about, credit risk, market risk, liquidity risk, or complexity risk.
- You don’t understand the investment after a 60‑second explanation. If the structure (or the fee stack) can’t be explained simply, think private REITs with layers of conditions, or complex riders in certain annuities, don’t sign until you do understand it.
- Title inflation. “Wealth Manager,” “Vice President,” even “Planner” aren’t regulated titles by themselves. Look past titles to actual designations, licenses, and a clean, or explained, disciplinary record.
- Your gut says, “something’s off.” Tone, transparency, how they handle questions, your instincts often surface problems before a spreadsheet does.
How to Vet a Financial Adviser (Fast)
- Check the record:
BrokerCheck (FINRA): brokercheck.finra.org
SEC Adviser Search: adviserinfo.sec.gov
Review disclosures (complaints, bankruptcies, judgments). One old issue with context isn’t the same as a pattern of misconduct. Go in with your eyes open.
- Confirm custody and reporting:
Ask, “Where are my assets custodied, and who issues my statements?” You should receive statements directly from the custodian, not only from the adviser.
- Understand the pay model:
Commissions, embedded fund expenses (12b‑1 fees), platform payments (“soft dollars”), and advisory fees can all exist in the ecosystem. Ask for a plain‑English breakdown of how your adviser is paid, and how that could influence recommendations.
- Demand clarity:
Ask your adviser to describe each major holding and why you own it, in simple language. If that’s not possible, hit pause.
What to Do If You Suspect a Problem
- Call the custodian immediately. Ask to freeze questionable activity and flag the account for review.
- Initiate an ACAT transfer to a new, independent custodian/adviser if appropriate. In some historic cases, investors were able to move assets out even before scandals fully came to light, speed matters.
- Contact regulators: file a complaint with the SEC and/or FINRA, and your state securities regulator.
- Consult an attorney experienced in securities/fraud; preserve emails, statements, and notes.
- After assets are secure, consider engaging a new, trusted adviser.
Key Takeaways
- Independent custody + independent statements are non‑negotiable.
- If it sounds too good to be true, it is, especially “smooth,” never‑negative returns.
- Never surrender approval over withdrawals from your accounts.
- Titles don’t protect you; disclosures and designations help.
- Your gut can be a risk‑control tool, use it.
Resources
Verify an adviser:
Keep learning:
Why Listen?
This episode aims to replace fear with a checklist, hype with healthy skepticism, and jargon with clarity, so you can spot trouble early, ask better questions, and keep your wealth plan on track.
Because in personal finance, simple, transparent, and verifiable beats slick, secret, and “too steady” every time.
GDS Wealth Management (“GDS”) is an SEC‑registered investment adviser. Registration does not imply a certain level of skill or training. This content is for informational and educational purposes only and does not constitute investment, legal, or tax advice, nor a recommendation to buy or sell any security. Examples of independent custodians include Raymond James, Charles Schwab, and Fidelity Investments. GDS Wealth Management does not endorse any specific provider Investing involves risk, including possible loss of principal. Past performance is not indicative of future results. Advisory services are provided only where GDS and its representatives are properly licensed or exempt. For additional information about our services, fees, and disclosures, please visit www.gdswealth.com/disclosures.