Owner of a financial firm has disappeared. How to vet your own advisor

The recent disappearance of a financial advisor — and possibly client money — may serve as a cautionary tale for investors.

Christopher Burns, owner of Dynamic Money in Atlanta, was reported missing by his wife on Sept. 25 after she couldn’t reach him, according to a Gwinnett County, Georgia, police report. His wife told police that he was supposed to turn over documents to the Securities and Exchange Commission by that day for an investigation related to his business, but that he did not know what the investigation was for.

His car was located in a parking lot in Atlanta by his wife, the police report says. She found an envelope containing copies of three cashier’s checks totaling more than $78,200.

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Investigators in the state are getting calls from potential fraud victims, according to Gwinnett police, who believe the SEC investigation is potentially focused on a substantial amount of missing money, according to a police spokesman.

The SEC did not respond to an inquiry about the case from CNBC, although regulators routinely do not comment on an ongoing investigation — or even confirm one exists. CNBC also was unable to locate an attorney representing Burns. His wife has released a statement asking for privacy as she focuses on caring for her young children.

While the details of Burns’ disappearance remain unclear and there’s no certainty of wrongdoing, the situation is a reminder of the importance of vetting your advisor.

You can check several online resources to see if they have any disciplinary actions against them or other information that may give you pause. 

BrokerCheck, operated by the Financial Industry Regulatory Authority, is one place to look. Those records show if the person is (or was) a licensed securities broker and whether there are any disciplinary actions in their past. 

You also can check a registered investment advisor’s Form ADV — a primary disclosure document for RIAs — at the SEC’s portal. There, you can find information about their services, fees and blemishes in their background.

If your advisor is a certified financial planner, you can check the Certified Financial Planner Board of Standards’ website to ensure their certification is current and see if they have any disciplinary actions from the board.

“[S]ometimes people hear these horror stories, and it’s fair for them to ask tough questions. And the advisor should be prepared to provide answers.”

Jeffrey Levine

Director of advanced planning at Buckingham Wealth Partners

“If something does show up anywhere, ask the advisor about it,” said CFP Dennis Moore, chief operating officer of Quest Capital Management in Dallas and 2021 president-elect of the Financial Planning Association.

“It’s important to get an answer and make sure you’re comfortable with it before you enter into that relationship,” Moore said.

Keep in mind that depending on an advisor’s licenses, business structure and professional credentials, information on them may not appear in all of those places.

Of course, there’s no guarantee a situation that starts out well won’t go south. However, there are some steps you can take to help minimize the risk of fraudulent activity once you have hired an advisor.

For instance, it makes sense for advisors to custody your assets elsewhere. That is, they may be able to conduct trades in your account on your behalf, but the custodian — i.e., Charles Schwab or Fidelity Investments — are in charge of keeping your money safe. 

“Don’t write a check made out to the advisor,” said CFP Jeffrey Levine, director of advanced planning at Buckingham Wealth Partners in Long Island, New York.

“Instead of that, it should be payable to the custodian,” Levine said. “Otherwise it creates a greater potential for fraud.”

Additionally, don’t be shy about asking your advisor what protections are in place to assure that your money will be used how you intended.

“I’ve heard advisors get offended by that,” Levine said.

“But sometimes people hear these horror stories, and it’s fair for them to ask tough questions,” he said. “And the advisor should be prepared to provide answers.”

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