Protecting Yourself from Fraudulent Financial Professionals

Whether they’re falsifying their credentials or sharing misleading information, it’s important to protect yourself from financial professionals by verifying their credibility

David Blanchett 15 September, 2020 | 12:58AM

Beware-Warning

Recently, while reading a local magazine, I was struck by an advertisement from a financial professional. The advertisement described a practice that appeared to be focused primarily on insurance solutions, but the professional touted having a Ph.D. in Finance, which made me curious.

I dug a little deeper once I found the professional’s website, where she claimed to have a Ph.D. in Financial Services from The American College of Financial Services.

My suspicions grew, so I reached out to the director of the Ph.D. program at The American College of Financial Services where, full disclosure, I am an adjunct professor. He said he’d never heard of her.

Because that particular Ph.D. program is very small, with no more than two dozen or so students, this lack of awareness shocked me. Upon checking with the registrar, there was no record of her ever being in the program at all.

I eventually called her directly to confirm whether she did actually have a Ph.D. But shortly after my call, the biographical information on her website was changed. There was no more mention of the Ph.D. nor the MBA she had also mentioned. How many of her listed qualifications were lies?

Long story short, I had a caught a thief. Now, you might ask, what exactly did she steal? My answer: credibility.

Financial professionals spend hundreds, if not thousands, of hours educating themselves so that they can better assist their clients. Credibility is an invaluable asset that they earn during that process.

As the financial-services industry evolves into one focused on helping clients accomplish their financial goals, it’s important that financial professionals educate themselves about various topics and that their clients educate themselves on finding the right support for their needs.

If you’re, perhaps, searching for an advisor and want to avoid running into one with questionable credibility, or already have one whose credibility you’re questioning, here are some steps you can take.

Validate Relevant Designations
Many people view the Certified Financial Planner designation as one of the most popular and relevant designations in the financial-services industry. I strongly recommend to anyone that will listen that if you’re going to work with a financial advisor, at a minimum they should be a CFP professional. While I’m sure the vast majority of them who tout a given degree or designation actually have it, there are some who don’t.

There are websites where you can learn more about the respective designation or credential, as well as where you can check designation status online. I would highly recommend doing this before you start working with a financial professional.

Check the Record
Next, you should double-check the professional’s background.

Do a Quick Search
You never know what you’ll find online. I’m personally a little wary of the reliability of online ratings, such as Google’s, but it doesn’t hurt to spend a few minutes searching for the individual to see what may turn up. In most cases it’s probably not going to be all that much, but you never know!

So, what’s the next step with my situation? We’ll see. I know The American College of Financial Services is sending the financial advisor I mentioned a cease and desist letter so, in theory, she’ll stop touting the Ph.D.

I don’t plan on starting a new career actively searching out financial advisors who are falsifying their credentials, but I can tell you next time someone tells me they have a designation, I may look them up just to be sure!

Morningstar Investment Management LLC is a registered investment adviser and subsidiary of Morningstar, Inc. This commentary is provided for informational purposes only and is the proprietary material of Morningstar Investment Management. Reproduction, transcription, or other use, by any means, in whole or in part, without the prior written consent of Morningstar Investment Management, is prohibited. Morningstar Investment Management shall not be responsible for any decisions, damages, or other losses resulting from, or related to, the information, data, analyses, or opinions or their use. The opinions expressed are those of the author as of the current date; such opinions are subject to change without notice.

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About Author

David Blanchett

David Blanchett  David M. Blanchett, Ph.D., CFA, CFP®, is head of retirement research for Morningstar’s Investment Management group.

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