10 million reasons to hire a fiduciary

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LauraLast week the SEC filed an injunction against the aptly named Cavalier Union Investments, LLC, and charged owners Merrill Robertson, Jr. and Sherman Vaughn, Jr. with defrauding investors of more than $10 million. The duo’s astounding audacity offers another example of how essential it is for investors to review their advisor’s credentials before handing over their lifesavings.

One click on the SEC’s Investor.gov website would have shown that neither Robertson nor Vaughn held a license to sell securities. Although they promised a diversified portfolio that would yield as much as 20%, they never even sought to invest the money in securities. According to the SEC, the only investments made by Cavalier Union Investments were restaurants that failed in 2014.

Yet, they continued to solicit investors. Robertson, a linebacker for the Philadelphia Eagles from 1999 to 2001, capitalized on the connections he’d made as an athlete coming up through the system. Many of his investors were former coaches and employees at the schools he’d attended.

In what has the makings of a classic Ponzi scheme, the duo allegedly used the money they collected to fund their own lifestyle and to keep up the pretense that they were successfully investing the money. New money went to investors who wanted to withdraw from their accounts.

We understand the nearly sacred relationship between a coach and his or her player and assume this mutual respect earned on the playing field contributed to the unlikely success of this scam. Still, we are surprised that it went on for as long as it did.

Retirement accounts represent the single biggest investment of people’s lives, and the one they worked the hardest to achieve. We recommend a thorough vetting process before handing over any assets, beginning with confirming the advisor’s registration through the SEC website.

  • Look for a fiduciary, one who is legally bound to act in your best interests.
  • Ask for references from current clients.
  • Understand where your money is being held. You should not have to write a check directly to your advisor. Your money should be deposited with a custodian, like TD Ameritrade, Charles Schwab, Fidelity, Vanguard etc. All of these offer online access so you can track your money from home.
  • Review your statements carefully.
  • Keep the lines of communication open between you and your advisor. If you have concerns, let him or her know.

At Winch Financial, we take our fiduciary role seriously. It pains us to read about people behaving in a dishonest and cavalier manner with the trust and precious resources of good people.