Most Financial Advisors Don’t Lie, Cheat, or Steal — But Some Do

The following is adapted from The Investor Protector by David Meyer.

Picking the right person and firm to trust with your life savings isn’t always as straightforward as you might think. It’s easy to be lulled into a sense of security over time. Maybe you’ve worked with your financial advisor for so long that they feel like family — so much so that even the suggestion that they’re not entirely straight-laced elicits shock and outrage.

This is exactly where dishonest financial advisors want you to be. Without vigilance and just a hint of skepticism, you can become an easy target for manipulation and misconduct.

The 1987 movie Wall Street was my first foray into the world of stockbrokers. The economy of the 1980s, of course, was the pinnacle of speculative trading, before computers were widely used. In those days, broker phone banks on Long Island were the epicenters of legendary sales. While brokers’ sales strategies have evolved, the same problems that plagued the industry in the 1980s still plague it today. If brokers want to lie, cheat, or steal, they will often find a way.

Financial criminals don’t look like criminals. They often look like the upstanding professionals that they should be. People employed by some of the country’s leading financial firms commit fraud all the time, often right under the noses of their supervisors.

Occasionally, investors face the consequences of their broker’s innocent or lazy mistake. Maybe their broker incorrectly enters a transaction order or overlooks a box while completing paperwork. Lawsuits and arbitration cases in these instances are few and far between. What I typically deal with on a daily basis is the result of unchecked, pervasive greed.

It seems like we want more of everything as a society. Generally, seeking prosperity and growth is a good thing. This drive fuels innovation and development. We become better people and live better as a whole — generally.

But for an ample minority, wanting more becomes a greedy pursuit of wealth in an audacious and blatantly insensitive display of disregard for others. It’s this psychological phenomenon that has separated individual investors from their hard-earned dollars throughout the last century.

During the early days of my career, I frequently asked myself an important question: Why? Why would anyone take such a huge risk and manipulate their clients? I imagine a normal-looking man shaving his face in the morning and peering into the mirror, thinking to himself, I wonder if today is the day the Feds will raid my office.

Investment fraud is always uncovered at some point. Schemes eventually unravel, lies and manipulation are discovered, and the broker faces public embarrassment, expulsion, restitution, and sometimes jail time. Back then, I could not fathom why anyone would risk it all, no matter how much money was at stake.

The last 20 years have shown me plenty of society’s worst humans. It’s become clear that chasing money becomes addicting for these people. Plenty has been written by prominent psychologists about greed as an addiction.

For that dopamine kick, a greed addict must acquire “bigger” and “better” — the next fancy car, yacht, estate, or penthouse. They wind up in a cycle of taking merciless advantage of those around them. Maybe they see the end result, but they cannot stop. At some point, they cross the line and can’t — or won’t — look back.

In some cases, deceptive financial advisors are caught in the act at the start of their bad behavior. Perhaps they haven’t committed fraud, but they’ve chosen to sell wildly inappropriate investments to their clients for no other reason than to generate more money for themselves. It might be holding back vital information the client needs to make an informed choice, or it could be flat out lying to clients just to make a sale.

I don’t question bad brokers’ motives anymore. Over the past 20 years, I’ve seen it all. Brokers or investment advisers can take advantage of you in almost limitless ways.

It’s up to you to be aware of that and to research whom you trust with your money very carefully. Once you select a broker, don’t just sit back and assume all will be well, either. Check up on your investments and what your advisor is doing on a regular basis. Because let’s face facts: you have to protect yourself from the financial advisors out there who lie, cheat, and steal.

For more advice on how to protect yourself from investment fraud, you can find The Investor Protector on Amazon.

David Meyer is the managing principal of Meyer Wilson, a national law firm he founded to represent investment fraud victims in their fight against deceptive brokers. Meyer Wilson is one of the nation’s leading investment fraud firms, recovering millions of dollars for clients throughout the last 20 years. David is currently the president of two bar associations: the Public Investors Advocate Bar Association and the Ohio Association for Justice. Included in The Best Lawyers in America®, David has also been twice named “Lawyer of the Year’’ by the publication in his practice area and location. For more information about David’s investor claims law practice, visit investorclaims.com.