Advisers warn clients to watch out for Haiti scams

Financial advisers are warning their clients to donate only to well-known organizations if they want to help the victims of the Haiti earthquake.
JAN 24, 2010
Financial advisers are warning their clients to donate only to well-known organizations if they want to help the victims of the Haiti earthquake. Scams are always a concern, of course, and this time, advisers are taking a proactive approach by sending e-mails to clients which provide pointers about potential scams to avoid and guidelines on how to research charity groups. Rand Spero, a principal at Street Smart Financial LLC, which manages $23 million in assets, cautions his clients not to contribute to telemarketers. He has also urged them to be careful about e-mail solicitations from organizations that are unfamiliar. Mr. Spero instead recommends that clients perform the same kind of due diligence that they would when researching an investment. “No one's been able to make a convincing argument to me to donate to an organization that's not established,” he said. “This is not something you want to be speculative toward.” Mr. Spero said that he has spoken with clients about donating to established organizations such as the American Red Cross and Doctors Without Borders. He also encourages clients to go to the website of GuideStar, which is an organization that analyzes non-profit groups, including how they compensate executives and their annual fund-raising efforts. Because of the fear of scams, Lon Dolber, president and chief executive of American Portfolios, a broker-dealer with $11 billion in assets, sent out a release on his firm's intranet encouraging advisers to donate to the Red Cross. His firm donated $2,500 to the organization. “Haiti is a pretty corrupt country,” Mr. Dolber said. “They've got to be careful because there's going to be a lot of stealing and people being taken advantage of.” Mr. Dolber suggests that clients or advisers turn to the Better Business Bureau to investigate charities. Laura Scharr-Bykowsky, a certified financial planner with Ascend Financial Planning LLC, sent an e-mail to her clients last week outlining guidelines, including potential red flags, when looking for a charitable organization. For example, she is reminding clients to get documentation of their contributions and keep copies for tax purposes. Ms. Scharr-Bykowsky is a member of the Garrett Network and is a fee-only adviser. She has also been telling clients to look closely at the organizations that they are thinking of funding. Ms. Scharr-Bykowsky and her husband decided to donate to World Vision, a non-profit group that offers help to children in foreign countries. She has donated to this organization for several years by sponsoring a child. Ms. Scharr-Bykowsky called World Vision and learned that it has doubled its staff to 800 since the earthquake and is trying to help match children with relatives outside Haiti. “I know exactly where my money is going,” she said.

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