Tuesday, November 13, 2007

"Ask First!" Before Engaging an Advisor

On November 12, 2007, some members of the "Estate Planner's & Administrator's Discussion" listserv discussed solicitations by salespeople, who act as "advisors", with the goal of selling investments, a "living trust", or tax shelters.

Customers can be cajoled into signing ineffective legal documents, buying inappropriate investments, or incurring unnecessary charges -- if they are not the victim of outright "cons" that steal their money.

Such "cons" are widespread, while efforts to curb such abuse are growing. See: PA EE&F Law Blog postings under the heading "Elder Abuse", including: "There is No Free Lunch" --SEC (09/13/07); Financial Elder Abuse Cases in PA (07/12/07); How To . . . Steal an Estate? (06/21/07); SEC's Senior Investor Protection Seminar on May 18 (05/07/07); Spotting Financial Elder Abuse (01/07/07); and PA AG Speaks to Seniors about Scams (09/22/07), among others.

Government & non-profit
organizations in Pennsylvania attempt to educate about elder abuse & financial exploitation, and to rectify specific cases. These include: the Federal Reserve Bank of Philadelphia, the Attorney General of Pennsylvania's Elder Abuse Unit, the Pennsylvania Department of Aging's Protective Services for Older Adults Program,the Institute on Protective Services, at Temple University in Harrisburg, and the Center for Advocacy for the Rights and Interests of the Elderly in Philadelphia.

To avoid an exploitation situation entirely, rely instead on advisors who are experienced, knowledgeable, trustworthy, and accountable.

But how can a consumer tell the difference between a
professional and a promoter?

One way was suggested in the listserv discussion: Investigate the advisor up front.

This can be done using the "Ask First!" questionnaire for advisors, developed in 2006 by H.E.L.P., a non-profit organization located in Torrance, California, and made available free for public use.

This questionnaire addresses the problem at the beginning of a relationship with a person who expects to advise a client or consumer:

This growing problem points out the need to know, in advance,

if the new advisor has legitimate professional credentials,
if the person will serve as a fiduciary and put your interests first, and
how the new advisor gets paid.

H.E.L.P. has developed the Ask First! form as a tool to help you. See the end of this page for a link to the Ask First! form.

Using the Ask First! form, you ask the advisor to disclose in writing his or her credentials and ways of being paid. Keep a copy of the form handy.

Use Ask First! at the beginning, before you start a relationship with a new advisor.

If the person is reluctant to complete the form, take this as a warning.
If the person will not put your interests first, take this as a warning.
Review the person's answers, and look for missing or inconsistent information.
Check out the person's licenses and other credentials, and past complaints and sanctions.
If the person doesn't answer all the questions, or if the answers make you uncomfortable, or if the answers do not "check out," do not do business with the person. Look for another advisor!

At the same time you use Ask First! be sure to ask for and check the advisor’s references.

The "Ask First!" form is available through the website of H.E.L.P.:

Ask First! is a PDF form that can be downloaded free, and printed out for your use. If you do not have a PDF reader -- you can obtain one for free from Adobe.

You may also order Ask First! through the mail. Please visit our publications order page for this and other free
Some attorneys who offered comments in that listserv discussion already supply this form to their clients, or request completion of the form by other advisors for a client, routinely; and they recommend the practice.

Use of the form might scare away unqualified advisors or con artists, or validate the credentials of a qualified advisor ready to assist. Either way, the form can be useful.

Update: 11/20/07:

This posting was noted recently on the
Wills, Trusts & Estates Prof Blog, in "How to Obtain Protection from Phony Advisors – the Ask First Form" (11/20/07), by Professor Gerry W. Beyer.