CFP Board releases ‘self-defense’ guide

Its title evokes “The Complete Idiot’s Guide to Tae Kwon Do,” but a forthcoming pamphlet from the Certified Planner Board of Standards Inc. has a much more serious purpose.

The certification group on Tuesday will unveil its “Consumer Guide to Financial Self-Defense,” a punchy, 24-page tip sheet highlighting traps that “shady operators” use to separate even the most sophisticated investors from their assets. It offers 10 real-life examples of fraud and unethical practices, followed by “self-defense moves” to sidestep shysters.

Examples range from an investor who lost $1 million after handing over power of attorney to an adviser falsely claiming to be a certified planner, to an individual who made a “tax-free” variable annuity exchange that yielded the adviser $80,000 in commissions and the client a renewed period of surrender charges.

Self-defense tips include doing background checks on advisers (“Trust but always verify”), doggedly questioning how advisers are paid, never writing checks directly to an adviser (“Make the check payable to the adviser’s business”) and engaging in long discussions on the pros and cons of products recommended (“If you’re hearing only pros, you’re not getting the full story.”)

The CFP Board plans an initial publication run of 30,000 copies and will hand-deliver the guide on publication day to all members of Congress. CFP certificants, who will be sent copies to share with prospects, are expected to approve of the project.

“To truly protect your financial status, seek the advice of an adviser who will put your interests first,” CFP Board CEO Kevin Keller writes in the introduction after expressing dismay at the way fraud and mismanagement by some financial professionals have undermined consumer confidence. “A list of certified financial planner professionals in your area is available on the CFP Board’s website.”