Financial advising is meant to help guide individuals through the often complex world of investments, savings, and long-term planning. A good financial advisor can be a cornerstone of your financial success. But, as Sheila Sanford’s memoir Know Who You Are Doing Business With reveals, not all financial advisors have your best interests at heart.

In this book, Sheila narrates her harrowing journey from trusting a financial advisor named Saul to realizing that her trust had been manipulated and exploited. The story unfolds with a quiet sense of betrayal, as Saul uses his charm and knowledge to gain access to Sheila’s financial life, only to deceive her in the end.

This tale is more than just a personal story of deceit; it serves as a practical lesson for anyone navigating the world of financial advising. In this blog, we will look at the subtle warning signs of economic mismanagement and deceit—red flags that could save you from the same fate as Sheila. Here are some crucial takeaways, inspired by her experience with Saul.

1.Too Much Charm, Not Enough Substance

Saul’s initial success with Sheila was mainly due to his charm. He wasn’t pushy or aggressive; he presented himself as knowledgeable, relatable, and always ready to listen. He made Sheila feel as though their partnership was built on trust, even though the nature of his advice was slowly shifting towards exploitation.

While it’s natural to appreciate a friendly, approachable financial advisor, the charm should never overshadow their ability to provide clear, factual, and logical advice. If an advisor seems more focused on making you feel comfortable than on providing concrete strategies and answers to your questions, it might be time to raise an eyebrow.

Red Flag: If your advisor spends more time trying to win you over with charm than explaining the details of your investments, be cautious.

2.A Constant Push for More Investments

Initially, Sheila was content with a steady, conservative investment strategy. However, as time went on, Saul consistently encouraged her to take on new, riskier investments. He discussed “opportunity zones” and “high-yield” ventures without fully disclosing the associated risks. What seemed like a series of opportunities for financial growth began to feel more like pressure to hand over more of her money continually.

An advisor’s job is to help you diversify and grow your wealth, but they should never pressure you into making decisions that make you uncomfortable. Sheila’s experience illustrates how an advisor can conceal their true intentions by continually suggesting new investments that benefit them more than you.

Red Flag: If your advisor continually suggests new investment opportunities, especially those with high risk, without allowing you time to review and process, it’s a sign that they might be more interested in their commission than your financial well-being.

3.Lack of Transparency

As Sheila’s relationship with Saul progressed, she began noticing subtle inconsistencies. Saul seemed to avoid clear answers when Sheila asked for more information about her investments. For instance, when Sheila inquired about the status of specific projects, Saul responded with vague reassurances rather than providing detailed explanations.

Financial advising should always be transparent. Your advisor should be willing to provide you with performance reports, project updates, and risk analyses. If an advisor becomes defensive or vague when you ask for clarity, it’s time to question their motives.

Red Flag: A lack of detailed, transparent reports on the performance of your investments or financial strategies is a significant warning sign. Advisors who avoid questions or provide vague answers may be hiding something.

4.Over-promising High Returns

In Sheila’s case, Saul often spoke about quick, high-return investments, particularly in the Opportunity Zones project. He painted a picture of fast growth and easy returns, leaving Sheila feeling as if she was missing out on an exceptional opportunity.

While every investment carries some risk, advisors should never promise returns that seem too good to be true. High returns come with high risks, and any advisor who promises extraordinary gains without clear evidence or understanding of the investment’s risk profile is likely not being honest.

Red Flag: Promises of high returns with little to no risk should set off alarm bells. If it sounds too good to be true, it probably is.

5.Encouraging You to Lose Control Over Your Finances

Saul’s most dangerous move came when he started pushing Sheila to hand over more control of her financial decisions. Over time, she noticed that her involvement in her financial planning started to dwindle. Saul made decisions on her behalf, presenting them as “best options,” without giving her the chance to understand or review them thoroughly.

A good financial advisor respects your autonomy and encourages you to stay involved in the decision-making process. They act as a guide, not a gatekeeper. If your advisor makes decisions without your input or makes you feel excluded from the process, that’s a major red flag.

Red Flag: If your advisor begins making decisions without your approval or leaves you out of discussions, it’s a sign that they might not have your best interests in mind.

6.Focusing Too Much on Personalizing Your Relationship

Over time, Saul began blurring the lines between professional advisor and personal confidant. He shared stories about his own life and started to build a personal connection with Sheila, not just as an advisor but as a “friend.” While it’s essential to have a good working relationship with your financial advisor, the line between personal and professional should never be crossed.

Saul’s attempt to become a “friend” was a tactic to make Sheila more trusting and less critical of his financial advice. He used this personal connection to sway her decisions, without her realizing that he was crossing boundaries.

Red Flag: If your advisor starts sharing personal stories or behaves more like a “friend” than a professional, it’s a tactic to lower your guard. Remember, your financial advisor is there to provide professional guidance, not to become a confidant.

7.The Advisor Stops Answering Calls or Responding Promptly

Once Saul started pushing Sheila into risky investments, the communication began to deteriorate. He would delay meetings, cancel them without explanation, or fail to return calls. When Sheila needed answers, Saul’s response time became slower and less reliable.

This is a classic sign of a financial advisor trying to distance themselves when things start to go wrong. If your advisor is no longer responsive or avoids meetings, they may be avoiding responsibility for their actions.

Red Flag: Delayed responses, missed meetings, or ignored calls are clear signs of an advisor who is no longer committed to your financial well-being.

8.The Escalating Sense of Urgency

Finally, Saul’s strategy was to create a sense of urgency. He would tell Sheila that if she didn’t act quickly, she might miss out on an opportunity. The urgency made it more complicated for Sheila to think things through carefully. The constant sense of pressure masked the real risks involved and clouded her judgment.

An advisor should allow you ample time to consider your decisions and should never pressure you to act hastily. If they insist on urgent decisions without giving you enough time to consider the details, it’s a red flag.

Red Flag: If your advisor insists that you make quick decisions or pushes you to act before you’ve had enough time to consider, that’s a significant warning sign.

Conclusion: Don’t Let Charm Fool You

The tragic truth that Sheila Sanford uncovered too late is that financial advisors can often appear genuine and trustworthy, only to reveal their true motives later. In her case, the financial advisor, Saul, manipulated her trust to his benefit. However, you don’t have to learn these lessons the hard way.

By staying alert to these red flags—whether it’s excessive charm, lack of transparency, or pressure to invest—you can protect yourself from the dangers of financial deceit. Your financial advisor should always be someone you can trust, but they should also be someone who respects your knowledge, autonomy, and the process of careful decision-making.

Remember, your money and your future are too important to leave to someone who doesn’t have your best interests at heart. Stay vigilant, ask the right questions, and never hesitate to walk away if something doesn’t feel right.