By Michael J. Searcy
Not everybody can get into this club. Not everyone I work with is entitled to buy into this product. I’m allowing you entry because of your elite status, but only if you make a quick decision because I can’t hold your spot long…
It’s the point of all scams—to prey on an individual’s desire to do better than most, and physicians seem to be a top target for these exotic schemes. Call it greed, call it whatever you want, but there’s a selling sizzle promising more than one should get, faster than one should get it, and it’s as sexy as can be!
The satisfaction that comes from investing in exotic products only available to the elite drives many to imprudently supply money to a promoter and overlook the credibility of who they are working with or what’s being sold. Even if you do trust your advisor, make sure to take due diligence in researching their operations. Are they insured for the products they’re selling you? Are the exotic products, the alternatives, the hedge funds, the private placement limited partnerships, and all the specialty type products covered under their policy? And if so, to what extent? If physicians carry malpractice to protect themselves from things gone wrong, you can bet there should be the same standards in the financial industry. If not, you‘ve got to ask yourself the question: are the insurance companies missing it or are the alternative and exotic products where most of the claims come from?—A risk they are unwilling to assume!
Hot Products = Danger?
Limited Partnerships
Offshore Disability Insurance Products
Tax Sheltered Ventures
Hedge Funds
Account Receivable Factoring Entities
Leveraged Exchange Traded Funds
Life Settlement/Viatical Agreements
Derivatives
Unregistered Securities
…and many more…
These products may be specifically EXCLUDED on your providers E&O (think Malpractice) insurance!
Protect Yourself Is the investment waving a red flag in your face? Look out for these common red flags in determining the validity of your potential investments:
- Promises higher than average returns
- Promotes exclusive entry
- Marketed as a tax shelter
- Strokes the ego, appeals to greed
- No system of checks and balances
- Low level of liquidity
- You don’t really understand the business
Remember, nobody can guarantee the success of a venture. However, a competent and qualified advisor with no vested interest should be solicited for a second opinion. Always look for an advisor who will evidence in writing that they accept fiduciary responsibility with respect to the advice provided. Even if you spend a little money for the advice, you’re making a decision with eyes wide open, because as the saying goes, “We don’t know what we don’t know!”