February 28, 2009

I'm No Bernie Madoff

I’m just as angry as you, maybe more so.  The politicians, CEO’s and regulators who failed you, failed me as well. I have been in the financial industry for 30+ years, attended the best business schools, studied under the best economic minds and, never the less, was still caught off guard by the magnitude of the current economic crisis.

Corruption, greed and ineptitude have always hovered to some degree over Wall Street. And Ponzi schemers and scam artists have always preyed on investors, especially in South Florida. But nothing that we have ever experienced compares to the current level of malfeasance and mismanagement that was rampant at the Financial Institutions complicit in the mortgage crises or the level of deception and damage perpetuated by Mr. Bernie Madoff.

Like most of you, the value of my 401k assets, personal investments, and real estate has tumbled. However, because I’m a financial planner, I carry an additional burden. In addition to my own family’s well being, I have the responsibility of overseeing and managing the financial futures of some 250 other families who are my clients and whom I care deeply about. I speak to many of these clients daily and some are now consumed with anger. Most of the anger is directed at the aforementioned politicians, regulators, CEO’s, etc., who either deceived or failed us. Some clients are angry with me for not having had the foresight to move all of their assets out of the markets when the crisis began over a year ago. I spend much of my time fielding concerned clients’ phone calls and doing my best to speak rationally and patiently with them about the pitfalls of attempting to time the market and about tactical ways to potentially navigate through the current crisis successfully. I understand the anger and frustration and I know that if the situation was reversed and I was the client, I would be looking for answers as well.

Many clients and new prospects now want to be reassured that the assets I manage, through LPL Financial, are protected from a Bernie Madoff type swindle. While it angers me that the Madoff’s scandal can affect investors’ confidence in truly trustworthy family advisors, I understand investors’ concerns and I welcome their questions. After all, similar to myself, Madoff had clients for 25+ years who trusted him implicitly. He served on Charitable Boards of Directors and was highly respected in the community. But I am able to review with my clients and prospects a list of clear, dramatic warning signs and red flags that were missed and of the transparent money management model I follow, and the strict safeguards and compliance steps I am required to rigorously adhere to.

There are many financial professionals in our industry who are diligent, honest and totally focused on their clients future financial security. When we wake up at 3 in the morning wondering about how the foreign markets are fairing and tiptoe over to the computer, we are worrying about all of our clients’ families as well as our own.  However, Madoff, Stanford, Lehman Brothers and Washington Mutual, etc. have brought a taint to all financial professionals now—whether we like it or not. 

My commitment to my clients going forward is that I’m going to employ all of the knowledge I have garnered over 30 years to help them through this crisis. I am especially committed to those who are retired or close to retirement and are worried about outliving their resources. However, to some who continue to call and vociferously express their anger at the system, my advice will be that it’s time to move on.  I understand the anger, but they need to either move ahead and focus on the future or be left behind.

Remember, I am probably angrier than you, but I have made a conscious choice not to show it.  I deeply resent the damage Wall Street has done to our economy and to the mental well being of my clients and the country. I hate what the despicable Madoff and his ilk have done to my financial industry. I am using this forum to vent and then I will devote myself anew to being creative and constructive in moving ahead. But please remember one thing…I’m no Bernie Madoff.

Austin A. Frye, MBA, JD, CFP®

If you know of someone who may enjoy reading this newsletter, click here
Don't keep us a secret!

Securities and advisory services offered through LPL Financial-- Member FINRA/SIPC