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Trust Issues: Bonnie Kirchner MST ’01

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This article originally appeared in the Bentley Magazine.

Trust Issues: Bonnie Kirchner MST ’01

Bernie Madoff may hold the record as world’s worst financial-adviser-turned-crook, but Brad Bleidt is a close second. In 2004, Bleidt confessed to stealing millions of dollars from his investment clients over two decades. No one was more surprised by the swindle than his wife, Bonnie Kirchner. 

Now divorced from Bleidt, the certified financial planner and former TV business reporter has published Who Can You Trust with Your Money? Get the Help You Need Now and Avoid Dishonest Advisers.

Why did you write this book?

A lot of people wanted me to tell my story, but I wanted to do it for the right reasons. I wrote the book to help people understand how something like this could happen, and how individuals can avoid becoming victimized. The financial industry is complicated, but a little information goes a long way when it comes to protecting oneself. I actually proposed the book about three months before Bernie Madoff confessed.

Did your own experience make Madoff’s scheme seem less surprising?

It’s always shocking, because you are not likely to suspect the people who do this type of thing. If you look at my ex-husband, he treated clients like family members. His clients viewed him as a son, brother, or best friend – and he did take money from his best friend and his mother. Really, he was the last person I expected would do this. Bernie Madoff, on the other hand, made his victims feel like it was a privilege to do business with him.

What’s the difference between a financial adviser and a broker or dealer?

In many cases, a broker is an intermediary between your adviser and the custodian firms that hold your assets, like Fidelity or JP Morgan. The broker provides your financial planner or adviser with a trading platform and compliance support. Your adviser can furnish you with information, but always verify directly with the custodian that you do have an account with the firm. I highly encourage having a trusting relationship with your adviser, but take steps to ensure that what they are telling you is true.

What’s your advice on choosing an adviser?

Ask your other advisers — say, your accountant or lawyer – for recommendations. Go to your friends, family and colleagues. Compile a list of names and check them out through FINRA [Financial Industry Regulatory Authority] or the SEC [Securities and Exchange Commission], and through professional organizations to which they belong. Then narrow the list to three people. Put them through a job interview process to make sure you get someone you can work with effectively.

What information on advisers is available? 

The SEC and FINRA websites [sec.gov and finra.org] both have areas where you can get reports on advisers. Look for disciplinary proceedings. Any broker or dealer in the business a long time might have some nicks along the way, because they oversee thousands of reps – so you need to assess the situations that have occurred. But definitely avoid anyone with egregious acts.

How much should I expect to pay an adviser?

Advisers get paid in a variety of ways – and you want to clarify how at the start. For straight financial planning, an adviser will most likely have a set fee or charge by the hour. If by the hour, get an estimate in advance. If you are investing, they may be paid through the products they sell to you, such as stocks, bonds and annuities, or they may charge a fee for assets under management. Be concerned about any adviser who answers questions about compensation in a vague manner.

What are other red flags?

If you are getting consistently good returns in a bad market, that’s a flag. Vagueness about investment strategies or compensation is also a flag. You should have a basic understanding about what they’re doing. If your adviser tells you he can’t reveal his process, run the other way. Quite frankly, there are no secrets to good investing.

Is there any protection from plain-old bad advice?

Be very clear about your own risk tolerance, which gauges how you feel about the ups and downs of investments. What’s your tax situation, time horizon and liquidity need? People tend to be risk tolerant when the market goes up and risk adverse when the market goes down. It’s important to translate those risk percentages into real dollars. If you are investing $100,000, think about a 20 percent correction … how would you feel about losing $20,000? Once invested, have the adviser show you how your investments are doing next to a comparable index.

Should I put all of my money with one adviser?

In the wake of Bernie Madoff, some people are diversifying among different advisers – but it can be a double-edged sword. If you have a variety of advisers, make sure each one knows what the others are doing. There is more complexity with multiple advisers because you’ll have more accounts, statements and tax forms. In the end, it’s a personal choice.

What are your top investment tips?

Now divorced from Bleidt, the certified financial planner and former TV business reporter has published Who Can You Trust with Your Money? Get the Help You Need Now and Avoid Dishonest Advisers.

Be sure to regularly review your investments and goals. In my experience, as people get closer to a goal such as retirement or paying for college, they get into a “pedal to the metal” mentality. Actually, those are the moments when you need to step back and be more conservative. Tax season is a good time of year to review your portfolio because you are getting your information together. Did your net worth grow or go down? Income statements and balance sheets sound very complicated and difficult to prepare, but they’re not. You need to look at your net worth and cash flow to make adjustments to your plan.

What’s on your plate besides writing?

I have an advising business, Even Keel Financial Services. A lot of what I do is regular reviews with clients so that we’re on the same page. We work on investing to reach their goals.

Sea Change Financial Education is the other part of my life. I’m doing speaking engagements and putting together training programs for individuals. My parents were Depression babies and taught us to be financially responsible. So many kids come out of high school today and have no idea about finances. How can we help them become financially responsible adults? Helping to figure that out is one of my goals.

Have your personal experiences influenced your work with clients?

It’s interesting. I’ve changed some of my fundamental advice. I was never a big fan of prenups, but now I do recommend them. It’s a way to get everything out on the table. If you create good financial habits in your relationships, then money is less likely to be a problem later on. Whatever your situation, good honest conversations and clear expectations — in personal relationships and with your financial adviser — are the way to go.

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