As Mr. Laidlaw says, “It is very easy to prevent this from happening again. Do not rely on the person managing your money to also be the SOLE provider of accounting on your account. Mr. Madoff’s firm was creating the statements for his clients and manipulating the data. Any reputable advisor will also have another 3rd party provider issuing a statement. If you are using a TD Ameritrade, Schwab, or Fidelity platform then you should be fine, as they are issuing the statement. At my firm, we create a consolidated statement that is also backed up by a 3rd party provider. Think of it as wearing both a belt and suspenders. The chance of your pants falling down is zero. Many of the stories that came out after from those who avoided Mr. Madoff had to do with the CPA or attorney reviewing what they were doing and advising the prospective client to not engage Mr. Madoff’s firm.
Common sense leads a reasonable person to think that the returns Mr. Madoff was claiming, without verification, had to be too good to be true. People chased greed and the appearance of success without doing basic due diligence on nothing more than a common thief.”
This post was generously provided by David Laidlaw.
David is president of Clarus Wealth Management. He is a financial advisor and estate planning attorney with 12 years of experience advising individuals and business owners on managing money, preparing for retirement, and creating tax efficient distribution plans.