Investors should consider hiring an hourly fee based financial planner to review their customer account statement every year. For a small charge, the investor receives a second opinion from an unbiased set of eyes. A quick Google search with the term “hourly fee based financial advisers” will bring up hundreds of choices.
Whoever manages your portfolio must use an independent financial institution, known as a custodian, to hold your assets. Record the name of the firm and its contact information. Instead of relying on your adviser's word, check out the custodian yourself. Mr. Madoff did not have an independent custodian for the assets entrusted to his firm and many believe his scheme would not have been possible if there was one in place. When Madoff claimed to have made a given trade, but it never hit the client’s account, a serious red flag would have been raised by the custodian. Also, the returns he claimed were exaggerated. If clients were receiving accurate statements from the custodian, they would have known his performance claims were false.
