In many cases, the operators of financial frauds and Ponzi Schemes the world over rely on people who have already been duped to bring in new suckers. Of course, the ones touting the services of a particular fraudster have no idea they’ve not only been deceived, but that they are helping weave an even larger web of deception. While it’s appealing to let others pick your advisor for you, the best thing to do is ‘trust but verify’ all financial opportunities.
According to the Economic Policy Institute (EPI), undisclosed conflicts of interest between investors and advisors costs investors an estimated $17 billion per year. The EPI came to this estimate by calculating the amount of investment losses for people who bought retirement products on recommendation from advisors who were paid on commission; many of these products were either more expensive or risky than was absolutely necessary.