Here's another example of a "financial adviser" who has been hard at work making his client's money disappear -- this one from my home town. The details:
To some of his clients Tom Bandyk is a financial magician -- he makes money disappear.
Bandyk offers financial advice. But some clients are complaining that their investments have vanished into scam companies.
In 2004, a Holland woman won a $200,000 judgment against Bandyk in Kent County Circuit Court. She alleged that Bandyk put her money into an IRA with a Nevada company called Tahoe Pension Services. Tahoe and some of her cash disappeared. Bandyk put part of her investment into more than 40 ATMs without her permission, according to the lawsuit. Court records show that Bandyk's attorney said Bandyk is more of an ATM salesman than a financial adviser, taking no fees for his advice but earning commissions from selling cash machines as investments.
In August, four Californians sued Bandyk claiming he lost their half-million dollars in a Chicago-based Ponzi scheme which may have cost investors as much as $50 million dollars. The operator of the scheme, Brad Weaver, has pled guilty to federal fraud charges.
At least two local investors, both in their 80s and ill, lost their retirement nest egg of nearly $200,000 through Bandyk to Weaver and his company, Beta Asset Management. Their attorney, former federal prosecutor John Smietanka, has been trying to get their money back for them.
Ok, so it's clear that this "financial adviser" is a loser when it comes to giving and implementing financial advice. The only question remaining is whether it's happening because he's a crook or simply incompetent (neither which are good alternatives for his clients.) It appears that the latter may be the reason for the problem:
Tom Bandyk says he is not a crook. He told Target 8 Investigators that he, too, is a victim. He said that he has lost more than $300,000 of his and his family's money to those scams, too. Bandyk said he has "not been smart in trusting people." He said he believed the information they showed him about the various scams and was trying to work hard for his clients. But, "you cannot overcome liars," he said in an exchange of e-mails.
He said, "If I was part of the scams, I would not be driving a 1999 Olds with a broken windshield. I am 64 years of age. Brad (Weaver) has destroyed my life," he wrote.
In fact, some things Target 8 Investigators observed support that notion. He does not appear to live the high-rolling lifestyle people might expect of scam artists. He does, in fact, drive a mid-size, 7-year-old car and lives in a modest Kentwood condo. He works out of a building in the 1500 block of Michigan NE that contains a number of one-man offices like his. He even signed personal guarantees for some of the faulty investments which made him the target of lawsuits. Not something the typical con artist would usually do.
The piece then goes on to highlight this "adviser's" history of citations from the government, so there's still no clear answer -- is he a crook or simply a moron? Either way, his clients are out of some serious money.
Here are my main thoughts on the issue of "financial advisers":
1. I do prefer a do-it-yourself philosophy for most financial planning issues. And this is relatively easy since most good money-related practices are easy to understand and simple to implement. But I realize not everyone's into learning about personal finances (or even equipped to do so.) That said, you do need a base level of understanding even if you go with a planner -- just to be sure you know what he's talking about (and to make sure he's not leading you down a wrong path.)
2. If you do decide to go with a planner, be sure you take the right steps to find a good one. Follow the rules of hiring a good financial planner and be sure to ask him/her the correct questions prior to employment. Remember, it's your money and you need to take ownership of and responsibility for it.
For some highlights of what I've written on this topic, see these posts:
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