By: Jack WaymirecloseAuthor: Jack Waymire Name: Jack Waymire
Email: jack@paladinregistry.com
Site: http://paladinregistry.com
About: Jack writes for the InvestorWatchdog website and Worth magazine. He worked in the financial services industry from 1976 to 2004. For twenty of those years he was the president of a Registered Investment Advisory firm and a Broker/Dealer. Jack is the author of Who's Watching Your Money? The 17 Paladin Principles for Selecting a Financial Advisor and is a co-founder of PaladinRegistry.com.See Authors Posts (87) | June 23, 2009 | Who Can I Trust?

The SEC filed formal charges against Stanley Chais claiming he knowingly raised money for Bernie Madoff’s illegal Ponzi Scheme.  Although Chais claimed to be a financial advisor, there are major differences between Money Finders and ‘real’ financial advisors.

Money Finders are usually slick marketing companies that raise assets for money management firms that may or may not be legitimate.  For example, Chais had three funds that were 100% invested in Madoff’s multi-billion dollar fraud.  For his efforts, Chais was paid millions of dollars of fees by Madoff for operating a front organization that appeared to be legitimate.

You should be very wary of Money Finders. They use sophisticated sales pitches to convince you to invest in managers they have "pre-screened" for you. This sounds good to less sophisticated investors who are told the Money Finder is recommending the world’s best money managers. You may be prone to buy this pitch because you don’t know how to evaluate money managers on your own.

You should be asking Money Finders four critical questions:

1. Who do you work for?
2. Who pays you?
3. How much are you paid to refer me to a manager?
4. What services do you provide that justifies your compensation?

Chances are you will get some very evasive answers.  If you think you are talking to a Money Finder, check with the regulators (FINRA.org and SEC.gov) before you pay any fees or transfer any assets.