March 3, 2025 • 31 mins
We’re diving deep into the world of trust (or lack thereof) in the financial services industry! This episode is all about how trust in your financial advisor should be more than just a warm fuzzy feeling; it needs to be backed by proactive planning and accountability.
We'll break down two compelling cases: one involving a major investment firm hit with a $17.5 million civil penalty for allegedly making misleading statements about its ESG-focused investments, and another where an advisor orchestrated a Ponzi scheme to deceive clients.
📢 We Want Your Input! Take our quick two-question survey here and tell us what’s most important to YOU when choosing a financial advisor.
Takeaways:
- Trust in financial advisors is crucial, but it must be verified through their actions and performance standards.
- Beware of investment firms that claim high returns with little risk; if it sounds too good to be true, it probably is.
- A Ponzi scheme can happen to anyone; always do your homework before entrusting your money to an advisor.
- Investing should align with your values, but ensure your advisor is genuinely representing those values.
- Don't follow the flashy marketing; focus on the fundamentals of investing for long-term success.
We'd love your input. Take our quick survey at https://forms.office.com/r/837zquxdET
Ponzi scheme source https://www.justice.gov/usao-ednc/pr/raleigh-investment-advisor-s-40-year-sentence-ponzi-scheme-and-obstruction-affirmed
article referenced about Invesco at https://www.mofo.com/resources/insights/241220-top-5-sec-enforcement-developments-for-november-2024
Volkswagen article at https://www.bbc.com/news/business-34324772.amp
_____________________________________________________
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About Your Co-Hosts:
Travis Maus has been in financial services for over fifteen years. He is a Senior Wealth Manager and Chief Executive Officer at S.E.E.D. Planning Group. Travis also hosts the Unleashing Leadership Podcast, where he dissects some of his favorite books on leadership and how you can apply it to your business or life.
Steve Campbell has over a decade of industry experience and is a...
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
(00:00):
Foreign.
Welcome to Ditch the Suitspodcast, where we share insights
nobody in the financialservices industry wants you to know
about.
We're here to help you get the.
Most from your money in life.
So buckle up and welcome toDitch the Suits.
(00:21):
All right, well, we just gotdone with an episode all about trust.
So last week, we were talkingabout trust, and we were talking
about establishing trust andadvisor your financial company.
And that trust needs to bemore than skin deep.
Right?
We've got to kind of like, digin there and figure out, you know,
there's got to be performancestandards, and there's got to be
(00:43):
things that the financialadvisor has said, look, this.
You can account on this.
This is what I'm going to dofor you.
And you then have to managethat and say, did you do what you
said you were gonna do?
Did you carry through thethings that you said you were gonna
do?
And that's really how youbuild trust.
So we're either being kind oflazy and a little bit superficial
(01:03):
by just, like, I made adecision, I trust and I'm gonna blindly
follow or listen.
I'm gonna make sure that Icheck periodically to make sure that
you're paying attention.
Right.
It's like.
So anyway, I was gonna do abad analogy.
You want to hear the bad analogy?
Yeah, I guess people can justtune out if they don't want to hear
it, but stay with us.
Go ahead.
So you get.
I'm picking on babysitters again.
(01:25):
You get a babysitter and youtrust the babysitter's watching your
kids, and then you get homeone night and the babysitter's making
out with some dude on your couch.
You don't know.
Right.
All right, well, not a good situation.
No.
You just walked in onsomething, and now you got to deal
with it.
Same thing happens with investing.
That's a pretty good analogy,I guess.
Not bad.
You brought it home.
(01:45):
Okay.
Not bad.
Not horrible.
All right.
All right.
I get a little bit off onthose sometimes.
I know.
Okay.
Rope you back in.
So anyway, we have somearticles that we're going to go through
today that talk about investortrust and the industry and all the
things that the industry iskind of doing to try to undermine
trust.
Because I think it's important.
It's important that we talkabout these things.
But also we've done one of these.
(02:06):
We're going to talk about.
We've actually done some otherepisodes on and.
And talked about some of theseissues already.
And this just happens to be aallegation against an investment
firm for, let's say,misleading about their investment
strategy.
So we've talked about ESGinvesting, environmental, social
(02:29):
governance, which is part ofsocially responsible investing.
And we talked about the issueswith it, really from a.
Moving the goalpost, right?
It's always kind of like, whatwas ESG yesterday is different today,
and it shouldn't be movingaround so much.
Right.
It should be, like, more consistent.
So can we trust that this is astory about that it's also a story
(02:54):
or an episode?
We're going to talk about.
Should you trust what majorfinancial firms are telling you in
order to try to get to do sell stuff?
When you hear VanguardFidelity, Charles Schwab, T.
Rowe Price, any of thesethings you see on super bowl halftime
shows, cryptos, those type ofthings, they're trying to get you
to buy their product, theirinvestment program, right?
So they're always going tocome out and whatever the focus groups
(03:17):
or whatever the marketingsays, this is what people are into.
They're going to try to crafta message that maybe isn't necessarily
a lie, but it's notnecessarily the clean truth, or it's
a little bit misleading at best.
And sometimes they do crossthat kind of line and they turn in.
They kind of embellish to thepoint where they are lying, where
(03:39):
it'd be too much of a stretchto really say that they're telling
the truth.
Do investment firms reallyhave your best interest at heart?
Are they just trying to sellyour product?
What happens when things aretoo good to be true?
We're going to talk about aninvestment firm, but then we're also
going to talk about aninvestment advisor who's running
a Ponzi scheme.
Juicy.
Yeah, yeah.
Interesting story on that one.
(04:01):
Are there financials out therethat really do have some kind of
special insight on investmentsthat guarantee high returns, little,
no risk.
I love this one.
Listen to Sirius XM radio,watch YouTube or anything.
Every other commercial is aninvestment guru trying to tell you
that you can buy thisinvestment, have no risk and make
10% annual returns.
And why wouldn't you do it?
(04:22):
Seriously?
You think that there's somespecial dude out there that you're
listening to it if, if it wasthat good because there's supply
and demand on this stuff, hewould just have all his money in
it and he wouldn't be onYouTube trying to sell it to you,
you know what I mean?
Or on Sirius XM trying to sellit to you.
That's where Ponzi schemesstart a lot of times.
So we're gonna talk A littlebit about that and then yeah, just
(04:47):
we're gonna.
Everything we talk about todayis a real life case and it's where
the kind of the industry runsamok on people.
Yeah.
So four years in, this is theclosest we're going to get to a murder
mystery podcast where we'regoing to read you headlines and talk
about through stories whichthey do on these popular podcasts
and what they really mean tobring context to you.
And so if you're brand new,welcome to Ditch with Suits.
Who's these popular podcasts?
(05:08):
Yeah, Murder mystery podcast.
Oh, Murder mystery podcast.
Yeah, where they like talkabout cases and they say in 1985
this guy.
We have to use like different voices.
Okay, we'll do that.
I'll try to use my Batmanvoice, but this is Ditch the Suits.
I'm Steve Campbell, yoursenior marketing director at Seed
Planning Group.
Travis, the guy who's beentalking, he is our CEO.
Seed is a fee only financialplanning firm.
(05:28):
So this show is all aboutthings like bringing financial topics
that can help empower you withyour life.
But some of the most popularepisodes we've ever had is just talking
about what's circulating outin the media, what's happening in
the news.
So again, you can get the mostmoney in life by understanding what
do these things mean and howdoes it affect you if you're working
a 9 to 5 or you own abusiness, when you hear stuff like
this and when you're talkingabout trust, it's really important.
(05:49):
So we're going to bring fromour standpoint what we've seen over
the years working withindividuals to try to help them that
are calling us.
Travis, should I be concernedabout this?
Is this something I need topay attention to to reframe what's
really important?
And at the end of the day,we've been talking about trust.
So with Ditch the Suits, we'regoing to talk about esg, some of
these topics.
So Travis, where do you wantto start for today with some of these
(06:11):
articles?
Mofo.com let's take a quickbreak to.
Hear a word from your sponsor.
This episode is brought to youby Seed Planning Group.
If you're looking for a lifegiving experience working with a
financial planner, then Seedis here for you.
Seed is a fee only financialplanning firm with a fiduciary obligation
to put your best interests first.
(06:33):
If your goal is financialfreedom and independence without
sales products or reallyglorified salespeople, then check
out Seed Planning Group todayyou can visit www.seedpg.com that's
www.seedpg.com.
and the best part, you canschedule a free consultation to find
out if their fee only plannersand their process are right for you.
(06:54):
It's a real place.
It's a real article.
Mofo.com ran an article onInvesco Advisors Pay 17.5 Million
Civil Penalty to resolveclaims of allegedly misleading statements
involving ESG investment funds.
So the first thing is this isa settlement.
So we're not saying that theydid anything wrong or didn't do anything
wrong, but they got accused ofdoing something wrong and then they
(07:16):
paid money to make it go away,basically to stop it.
So you can infer whatever youwant out of it.
But as we talk about this,it's somebody probably did something
wrong.
On November 8, 2024, the SECcharged Invesco Advisors, Inc.
(07:37):
We'll call them Invesco, goingforward with making allegedly misleading
statements about thepercentage of assets under management.
So in our industry, that'scalled aum.
That included environmental,social and governance, which is ESG
factors in investment decisions.
And according to the orderbetween April 20 through July 22,
(07:57):
Invesco included materiallymisleading statements that ESG factors
were integrated into 70.
Between 70 and 94% of their AUM.
So what they are saying isthat let's just pretend they were
managing $100 billion in AUMassets under management.
(08:18):
What they are saying isbetween 70 and 94%, which is a really
wide range.
So I'm not even sure how youget away with that.
Between 70 and 94% had sometype of ESG factor being used in
the funds.
That's extraordinary.
That is.
That is a lot for kind of justInvesco is a giant mutual fund company.
(08:42):
So they have lots of mutualfund companies.
Mutual funds think likeVanguard or Fidelity or T.
Rowe Price or American Funds.
That's.
That's Invesco for you.
Yeah.
And I think that'sfascinating, right, because we've
talked about ESG and whypeople have typically invested in
ESG because they want topotentially align their money with
their values and make surethat they're very noble of the investments.
(09:03):
It is very noble.
But as we've kind of talkedabout our industry, it's been soured
in so many ways becausecompanies kind of misleading.
And then you pay all of this money.
I mean, if you say thatsomething's ESG when it's really
not as an investor, like, howdo you also make sense of something
when you can't pinpoint it?
And it goes back to the ideaof Trust.
If you tell me, Travis, thatthis is esg, I.
(09:25):
I'm trying to believe you.
But then when they actuallyaudited and looked at it, they discovered
they must have, that they wereoff and what they were.
The SEC has made a big pushover the last couple of years to
look at people who are sayingthey were doing ESG investing and
saying, but what does thatmean, right?
So if you do ESG investing,what is the thesis and what are you
(09:45):
buying?
What are you not buying?
And is that actually what'sshowing up in the portfolio?
Or are you just telling people that?
And because they don't knowhow to decompose a mutual fund or
something, they can't, youknow, they can.
They don't know exactly ifyou're following these mandates or
not.
And what they found is that alot of firms out there are saying
that they're ESG or sociallyresponsible, but you can't tell the
(10:07):
difference between that andany other investment.
And part of the reason is itis investment.
It's a thing called style drift.
And it's something that youlook at when you look at a money
manager is you told me this isyour investment thesis, but because
the performance was bad, youstarted to doing this other stuff
over here to try to make upthe difference.
So you said you were going tobe esg, but you couldn't.
(10:28):
In the last year, a lot of thetech stocks aren't esg, so the ESG
portfolio wasn't performing.
So you started buying me thetech stocks, which actually wouldn't
match the definition of ESGyou had sold me on in the first place.
So now I have a portfolio.
I'm paying you for aportfolio, and I'm trusting you for
this portfolio that I believematches up with the values that you
(10:49):
had advertised.
But I'm getting somethingvery, very different.
So that's where the issue is.
The order found that thepercentages Invesco shared included
Invesco's passive exchangetraded funds or their ETFs.
So ETFs are like mutual fundsthat sell in the middle of the day.
Mutual funds always sell at night.
ETFs you can buy and sell justlike a stock, but it looks like a
(11:11):
mutual fund.
And when they say passive,they're talking like indexes.
So it's AN S&P 500 ETF.
So it's like an S&P 500 indexmutual fund, only it sells in the
middle of the day or wheneveryou want to sell it.
They were misleading becausethe ETFs did not consider ESG factors
in the investment decisions.
By their passive nature, theycould not take those factors into
(11:33):
consideration.
An example, the order notedthat Invesco's percentages include
Invesco QQQ.
I don't know what that is.
A passive ETF that tracks theNASDAQ 100.
So the NASDAQ 100 is an index.
It's a subset of stocks already.
So they have a fund thattracks that.
So it's buying the exact samestuff that's in it.
(11:55):
And they're saying that it's esg.
Well, if it was esg, you wouldhave to exclude some of the funds
from that.
So you could say we try totrack that, but we've subtracted,
you know, 10 of the holdingsor something because they don't meet
our guidelines or somethinglike that.
But they didn't do it.
They just said, this is ourNASDAQ 100 fund and it's ESG.
(12:16):
Yeah, because when you, when you.
Or that's what's alleged.
Companies are supposed to beable to meet a number of different
standards to prove that theyare environmentally, socially governance
fitting.
And within these.
And these could be things,child labor laws.
This could be the way thatthey produce certain goods.
They have to be able to checkand show that they're able to do
this.
So if you basically are nowmoonlighting and say, hey, we're
(12:38):
labeling this as esg, eventhough it's following an index where
the companies aren't aligning,I think again, when it goes back
to trust, I think when you'retalking about investing, sometimes
it's hard for people.
Like, what are we talking about?
This would be the equivalentof you buying a certain type of groceries,
believing that something isorganic or grass fed for a period
of time.
And then, you know, monthsinto it, you're learning.
(12:58):
Well, the farmers actuallykind of lied and they've been using
this source of.
Meat or it's not grassfinished, it's grass.
It's not exactly what we're.
Till the last month of itslife and then we pump it full of
hormones and.
Or I'm thinking about, I thinkit was years ago, Volkswagen got
into hot water because theysaid that their certain car emission
system was leading in terms ofsafety and pollution.
(13:19):
And then it came out whereVolkswagen basically just said, we
actually kind of lied.
Yeah.
Oh, I remember people that.
People that bought the carswere, were demanding lawsuits because
they bought the car with theintention that they were being told
you're helping the environment.
To only come to find outVolkswagen Said our bad, we've actually
been using different emission statements.
(13:39):
So when it comes to investing,we're just trying to frame it that
there was a company that washolding itself out as being environmentally
centric with esg, while at theend of the day, especially in large
amounts of money, not quitemeeting what someone was buying into
under the premise of this isaligning my values with my money.
Yeah.
And so the SEC also know that,and this is a little ticky tack,
(14:02):
the SEC noted that Invesco hadno comprehensive.
So the comprehensive is alittle bit from a regulatory body,
a little bit of an unfair termset of written policies and procedures
concerning how Invescomeasured ESG integration.
So Invesco may have had adefinition of what they consider
(14:23):
esg, and maybe it just doesn'tmatch up with what everybody else
considers esg.
Right.
However, the SEC did not thinkthat it was a comprehensive set of
written policies and procedures.
So that's a little bit hardwhen you read any of these things.
You gotta kinda like readbetween the lines.
So really, Invesco could havehad some standards, some firm standards,
(14:45):
but they weren't comprehensiveenough, or maybe they weren't, you
know, formalized enough.
But certainly it does looklike they maybe dropped the ball
here.
So, you know, the second partof it, they definitely have to develop
that stuff.
But more importantly, I mean,I would assume that they definitely
have what they consider esgbecause they're saying they're esg.
Right.
So if somebody goes to theirwebsite and says, what's esg?
(15:09):
They're going to explain whatESG is in lieu of anything else.
That's the definition.
So kind of looks like it waseasy picking, but a lot of firms
got in trouble for that.
Now, if you're what we'retalking about, worried about trust
and can you trust your advisor?
Well, here's an entire companythat is kind of corrupted in the
sense that ESG is a hot button topic.
(15:30):
So we'll just say everything's esg.
We have more ESG thaneverybody else.
So you'll come and buy our funds.
Because when you look at thefund, you have no way to tell if
it's actually esg.
Unless you have some analytic tools.
Yeah.
And you go back to that ideaof trust if you're an advisor that
manages managers in the storythat you were told by a wholesaler
(15:51):
is, we at this companyprimarily use ESG centric mutual
funds.
And here's why that's important.
And the advisor turns aroundand tells Mr.
And Mrs.
Jones, hey, you know how yousaid ESG is really important?
I found a company that's gonnamatch what you're trying to do to
only find out years later.
And then 70 to 94% they were off.
(16:11):
Right.
It does create mistrust in thesense that if you say you're gonna
do something in anything inlife and you don't do it, what are
the ramifications?
And trust is gonna be broken.
And so ESG is one of thoseareas where companies can tout their
flag and say, we're leading inthis area, and you would want it
to be accurate, but when it'snot, it really does raise a red flag.
(16:34):
That that was the one thingyou said you were going to really
do well in, and you didn't.
And that's part of the reasonwhy we addressed our program.
We looked at the way that theratings companies were looking at
companies, individualcompanies, and we were saying, there's
no consistency.
It's a black box.
We can't figure out whatthey're talking about and why companies
are positive and environmentalone month and negative the next month.
(16:57):
And it looked way political.
And so we said, look, esg, ifyou go back to that episode, I think
what people are really sayingis, I have values that I want to
invest by.
Help me invest by my values.
You don't need a company topackage your values for you.
You need a company to listento you and say, what's important
(17:18):
to you?
How do we help you achievewhat's important to you?
And if you want somethingspecial, what's it going to cost
a lot of people?
I want something special.
This is what it's gonna cost.
Okay?
I don't want it that bad.
Or, yes, I'd be willing to payfor that.
But that's an honestconversation versus, you know, just
trust me, just trust me.
I don't trust anybody likethat, Right.
(17:38):
I just don't.
I wanna know what's behind it, right?
Like, show me what's behind it.
You don't go into a jewelrystore and say, I'd like that ring.
And, you know, look at it andthere's no price on it.
And then you go, okay.
And they're sizing you up andyou go, what's the price?
They're like, for you it's $4,000.
And then the next person comesin and they go, oh, for you, it's
1000.
(17:59):
That would infuriate you.
Yet that's kind of whathappens with some of the stuff in
the financial world.
So to Invesco's defense, theSEC charged Invesco with willful
violation of the InvestmentAdvisors act of 1940.
But without admitting ordenying the SEC's finding, Invesco
agreed to a cease and desistand to pay $17.5 million civil penalty.
(18:22):
So basically, Invesco said, wewon't advertise that anymore.
We're not gonna do that.
We'll kind of clean up our act.
So optically it looks better.
And we're not misleadingpeople, or we're not accidentally
misleading people if that'snot what they meant to do.
So I think that that'simportant because it's not like this
was a court case that got proven.
You know, it kind of lookslike they did something wrong, but
(18:44):
it, you know, with all thosethings, you always have to make a
decision, do we just want tosettle or.
And, you know, you could say,would they settle for $17.5 million?
When you're talking aboutfirms that manage billions of dollars,
you know, that's, that'sactually a drop in a bucket.
And the hardest thing is,though, that doesn't fix the investors
who got violated.
That's the worst part.
If an investor actually gotviolated, that money's not fixing
(19:07):
their situation.
Yeah, because we've talkedabout, too, with esg.
I think if you have a plannerthat's advocating in your behalf
and they say, this isimportant to me, it's also aligning
back to, well, what do youneed to live?
And how does this money factorinto it?
And so if you had somebodythat's brave enough to raise their
hand and say, I want to dothis, to only have a company not
uphold their side of thebargain, I think is a challenge.
(19:29):
But let's get into the.
To the juicy one here.
Why don't you talk to us maybeabout this next one.
Justice.gov Eastern Districtin North Carolina.
This is my.
This is your voice.
This is my voice.
Okay.
Eastern District of NorthCarolina Rally Investment.
Awesome.
40 changed.
40.
(19:50):
Okay, stop it.
40.
Okay.
Eastern District of NorthCarolina, Raleigh Investment Advisors.
40 year sentence or Ponzischeme and obstruction affirmed on
appeal.
United States Department of Justice.
So I happen to know about this one.
I'll read the story first andthen I'll tell you what he was actually
(20:11):
doing, okay?
Because it's disgusting.
And this is back to the beginning.
Remember when we said if it'stoo good to be true, somebody promises
you they have a special kindof investment, they're going to take
care.
Guaranteed return.
Super safe.
No worries.
Make a lot of money as soon asyou hear that like, you know, if
you want you can slap them,but at best you should turn around
(20:33):
and walk out the door, right?
Or at the least, here's thebasically synopsis of the story.
Raleigh investment advisor's40 year sentence for Ponzi scheme
and obstruction affirmed onappeal that was September.
The Original case wasSeptember 9, 2021.
Stephen Condon Peters, aformer investment advisor and owner
of Vision Quest WealthManagement, lost his appeal today
(20:56):
in a some legal word opinionissued by the United States Court
of Appeals for the 4th Circuit.
The judge against Peters,which included the judgment against
Peters, which included a 40year prison sentence, 15 million
and change in restitution andforfeiture of assets, was fully affirmed.
(21:20):
So basically he got convictedback in 2021 and then he tried to
appeal it and they said nah,you were bad, you're gonna pay people
back.
Now the problem is that mostof that $15 million is not recoverable.
They seized a bunch of us.
He had a horse farm, he had ahouse in South America, Costa Rica
(21:42):
that he had built with some ofthis money.
He had some artwork and stuff,but most of the money they never
got back.
Peters was convicted on allcharges against him in a week long
trial in 2019.
The evidence showed thatPeters, in his role as a registered
investment advisor, defraudedhis numerous clients by steering
them into investments in whichPeters had a direct financial interest.
He then compounded his crimesby attempting to defraud the SEC
(22:03):
with false documents and statements.
At sentencing, the judgecommented on Peters crimes were breathtaking
but were proven with a tsunamiof evidence in issuing his 40 year
sentence.
The court also noted thatPeters quadrupled down on the crime
by among other things,perjuring himself at trial.
What he was doing was he had awhole bunch of different companies,
(22:27):
kind of like shell companies,like LLCs and Stuff, including his
firm.
And he was going to retirementage investors and he was getting
them to give him loans andpromising like really high interest
rates, like I'm going to giveyou 8% interest, you give me a loan
(22:49):
and I'm going to use that to,to go out and expand the business
and that's how you're gonnamake your money.
But what he was doing isSteve, he was taking a loan from
you and then he was taking aloan from your mom and then when
you wanted money back, he'dalready spent the money he took from
you.
So he gave you his mom's moneyor your mom's money.
(23:10):
Right?
It was just a Ponzi scheme.
He was basically doing and howhe was selling it is he was telling
people, well, it's backed bymy company.
My company is really secure.
So you go to this financial advisor.
You trust him.
He looks the part.
He had some good pedigreewithin the industry, had worked for
some big mutual fund companiesor investment managers, whatever.
(23:32):
I think he was an ex.
He was a retired military ofsome degree, or he had spent some
time in the military.
So he had all the parts.
He looked good, he looked trustworthy.
And he was like, you couldtrust me.
I'm gonna.
You know, you can get this.
You're gonna make 8% on this.
You're giving the money to me.
You can trust me.
You're gonna be backed by my company.
(23:52):
Well, when you look at thecompany, there's nothing in the company.
So what he was doing is takinga loan.
He was paying it out from thecompany to himself and spending the
money on whatever.
And eventually, I don't knowhow it got turned in, but eventually
it made its way to the sec.
Probably what happened ispeople went to him and said, hey,
I need my money back.
And he wouldn't give it back,or he was locking it up.
But could you imagine, youhave $500,000 and somebody comes
(24:16):
in and sells you a couplehundred thousand dollars worth of
these loans, and it goes bellyup, and you never get that money
back.
And that was your retirement money.
And I Googled Ponzi scheme, Igoogled financial fraud to kind of
like, look at some of thecases and stuff.
And you can literally Google2024 Ponzi schemes, 2023 Ponzi schemes,
(24:37):
2022 Ponzi schemes.
They're all shapes and sizes,but a lot of times, oh, they told
me that I was getting 7% on myCD or I could buy this fund and I
would get a guaranteed 10%,you know, and there was no risk to
it.
Or, you know, I give them aloan and they were going to invest
in these properties for me.
You don't need any of thatstuff, first and foremost.
(24:59):
Secondly, do you really think.
And people do think this, butthere's guys out there that are registered,
that have the same licenses aseverybody else, but they somehow
have some kind of magicinvestment that nobody else has.
And they happen to be anindependent firm with no big brother
(25:22):
kind of looking over them, andyou're writing a check to them.
Bernie Madoff, like, you go towork with him and you write a check
to Bernie Madoff.
Then you get like ahandwritten statement, right?
And this is like the airplanesin September 11, we don't think to
put a door in the cockpituntil the plane crashes.
It's Bernie Madoff.
It's like, maybe you shouldn'twrite a check to Bernie Madoff, you
(25:44):
know, or maybe when you getstatements that shows exactly 16%
return for like five years ina row, you should be going, no, no,
this isn't good.
But it happens.
And that's why you don't havetrust in the industry.
But how do you protect yourself?
You're not hiring.
When you take your money andinvest your money with somebody,
(26:05):
you can't be lazy.
You got to do due diligence.
But think about it from astandpoint of who are you writing
the check to and how do youknow that that money's going to be
there for you?
There's so many firms to work with.
If a firm says, you write yourcheck to us, you know, I.
To me, that's a concerning issue.
(26:26):
Now, there could be situationswhere they're a trustee or something
and there's some due diligenceyou can do on that.
But you know, when it comeswith some kind of underlying like
guarantee or you can trust me,or these interest rates are higher
than any place else you canget them, man, that's.
Well, it's upsetting, right,because individuals are going out
(26:47):
and they're trying to find atrusted professional.
And when you have a situationlike this, not only is it painful
for the individuals thatexperience the loss because an individual
took advantage of them, butthen how it sours the entire experience
of an industry where people nolonger want to hire somebody because
they've read horror storieslike this.
Now they're few and far between.
(27:08):
But that's the whole idea of trust.
And people are trying to getrich quick or get a heads up on somebody
without paying attention.
I think you've done a reallynice job over the last few years
of really helping peopleunderstand the small decisions that
you make make and make a hugeoutcome over your lifetime.
And I think that's kind of thegenesis of why we called this ditch
the suits, because you'regoing to get into it here in just
(27:30):
a second.
But we were raised in anindustry that said you got to look
the part, you got to dress thepart, and that's what sells people
on trust.
When at the end of the day, wefigured out that if you just do a
lot of good by a lot of peopleand tell the truth and help them,
then you're going to helppeople solve their problem.
And people need to stoplooking for sexy Right.
Like, sexy seems to sell inthe investment world.
(27:52):
Alternatives, you got to have alternatives.
You got to have hedge funds,you got to have this, that, and the
other thing.
The truth about investing.
You're trying to buy a cut ofa company for a good price so that
the future earnings, you get agood share of those.
It's all you're trying to do.
You're trying to get a cut ofthe future earnings of a company
(28:13):
and you want to get a goodprice on it.
You don't need really sexythings that you don't understand
that are guaranteed by whoknows what.
If it's too good to be true,don't trust it.
It's the marketing machine.
Watch out for the marketing machine.
If an advisor offers yousomething special and the returns
are really special and they'resomehow involved in creating the
(28:36):
investment, you know, that'sone of those slap them in the face
or walk away moments.
You know, it's just they'rethinking that you're dumb.
Honestly, that's what they're doing.
And almost all these Ponzischemes, when you read about them,
they're all cooked up atsomebody's got.
And they're convincing people.
You would think, how wouldgood people fall for it?
(28:57):
People fall for it all thetime because they trust.
I trust him.
So and so introduced me tothat person and I just trusted them.
I didn't know better.
Somebody like us, we're goingto look at that situation and go,
that's just blatantly illegal.
Because we know, we know youcan't do that.
But the typical person's like,I didn't know they couldn't do it.
(29:18):
You know, they said they could.
They're registered.
Well, and you've done a reallynice job these last two episodes.
Again, there was an.
If you just jumped into thisone today, right?
We talked about theunfortunate misdoings of professionals
and companies that can takeadvantage of individuals.
But it was really around thisidea of what we talked about in our
last episode.
Which is what's moreimportant, trust or performance?
(29:40):
If you missed that episode, goback and listen to it.
I think it was a prettyinteresting look at our industry
and what people that voted inthe survey, what they thought was
important.
But we also told you that inthe show notes, we'll include it
for this one, too.
We have our own little minisurvey for ditch the suits as Travis
and I would love to hear fromyou again.
You don't have to put yourname next to it.
But what is important to youwhen you hear Stories like this,
(30:01):
when you do go out to find afinancial adviser, what are the qualities
or what are you looking for inan individual?
And then also, what wouldcause you to ever leave somebody?
You know, it's your money andit's your life.
And we started this show tohelp empower you with the financial
planning, education, and thethings you can do to avoid situations
like this where you're waitingon the next big thing to help you
survive.
(30:22):
If you just do some reallysmall things one after the other,
and you're proactive and yourun the money business that Travis
always talks about and you dothe right things year in and year
out, you're going to get aheadin life.
So if you have questions oryou have situations where you're
like, guys, I don't know ifI'm being taken advantage of.
Get in touch with Travis andI, you know, reach out to us.
Head over to ditchesuits.com,fill out the contact form.
It doesn't mean younecessarily have to hire seed or
(30:44):
work with us, but if you justgot questions, get in touch with
us.
We're real people, just like you.
This is a fun one.
And again, part of 2025, wegot some amazing guests lined up
for you guys, so you're notgoing to want to miss subscribe to
this show.
So you never miss an episodeof Ditch the Suits.
And as always, thanks forbeing our guest.
Thanks for checking out Ditchthe Suits.
Be sure to write a review ordrop a comment about this episode.
(31:04):
And if you want more like this.
Head over to ditchesuits.comyoum can send us a message and get
in touch.
Let us know how we can helpand be sure to share any topics you'd
be interested in having uscover on the show.
We're here to help you get themost from your money in life.
Thanks for being our guest andchecking out Ditch the Suits.
Foreign.
Welcome to Ditch the Suitspodcast, where we share insights
nobody in the financialservices industry wants you to know
about.
We're here to help you get the.
Most from your money in life.
So buckle up and welcome toDitch the Suits.
(00:21):
All right, well, we just gotdone with an episode all about trust.
So last week, we were talkingabout trust, and we were talking
about establishing trust andadvisor your financial company.
And that trust needs to bemore than skin deep.
Right?
We've got to kind of like, digin there and figure out, you know,
there's got to be performancestandards, and there's got to be
(00:43):
things that the financialadvisor has said, look, this.
You can account on this.
This is what I'm going to dofor you.
And you then have to managethat and say, did you do what you
said you were gonna do?
Did you carry through thethings that you said you were gonna
do?
And that's really how youbuild trust.
So we're either being kind oflazy and a little bit superficial
(01:03):
by just, like, I made adecision, I trust and I'm gonna blindly
follow or listen.
I'm gonna make sure that Icheck periodically to make sure that
you're paying attention.
Right.
It's like.
So anyway, I was gonna do abad analogy.
You want to hear the bad analogy?
Yeah, I guess people can justtune out if they don't want to hear
it, but stay with us.
Go ahead.
So you get.
I'm picking on babysitters again.
(01:25):
You get a babysitter and youtrust the babysitter's watching your
kids, and then you get homeone night and the babysitter's making
out with some dude on your couch.
You don't know.
Right.
All right, well, not a good situation.
No.
You just walked in onsomething, and now you got to deal
with it.
Same thing happens with investing.
That's a pretty good analogy,I guess.
Not bad.
You brought it home.
(01:45):
Okay.
Not bad.
Not horrible.
All right.
All right.
I get a little bit off onthose sometimes.
I know.
Okay.
Rope you back in.
So anyway, we have somearticles that we're going to go through
today that talk about investortrust and the industry and all the
things that the industry iskind of doing to try to undermine
trust.
Because I think it's important.
It's important that we talkabout these things.
But also we've done one of these.
(02:06):
We're going to talk about.
We've actually done some otherepisodes on and.
And talked about some of theseissues already.
And this just happens to be aallegation against an investment
firm for, let's say,misleading about their investment
strategy.
So we've talked about ESGinvesting, environmental, social
(02:29):
governance, which is part ofsocially responsible investing.
And we talked about the issueswith it, really from a.
Moving the goalpost, right?
It's always kind of like, whatwas ESG yesterday is different today,
and it shouldn't be movingaround so much.
Right.
It should be, like, more consistent.
So can we trust that this is astory about that it's also a story
(02:54):
or an episode?
We're going to talk about.
Should you trust what majorfinancial firms are telling you in
order to try to get to do sell stuff?
When you hear VanguardFidelity, Charles Schwab, T.
Rowe Price, any of thesethings you see on super bowl halftime
shows, cryptos, those type ofthings, they're trying to get you
to buy their product, theirinvestment program, right?
So they're always going tocome out and whatever the focus groups
(03:17):
or whatever the marketingsays, this is what people are into.
They're going to try to crafta message that maybe isn't necessarily
a lie, but it's notnecessarily the clean truth, or it's
a little bit misleading at best.
And sometimes they do crossthat kind of line and they turn in.
They kind of embellish to thepoint where they are lying, where
(03:39):
it'd be too much of a stretchto really say that they're telling
the truth.
Do investment firms reallyhave your best interest at heart?
Are they just trying to sellyour product?
What happens when things aretoo good to be true?
We're going to talk about aninvestment firm, but then we're also
going to talk about aninvestment advisor who's running
a Ponzi scheme.
Juicy.
Yeah, yeah.
Interesting story on that one.
(04:01):
Are there financials out therethat really do have some kind of
special insight on investmentsthat guarantee high returns, little,
no risk.
I love this one.
Listen to Sirius XM radio,watch YouTube or anything.
Every other commercial is aninvestment guru trying to tell you
that you can buy thisinvestment, have no risk and make
10% annual returns.
And why wouldn't you do it?
(04:22):
Seriously?
You think that there's somespecial dude out there that you're
listening to it if, if it wasthat good because there's supply
and demand on this stuff, hewould just have all his money in
it and he wouldn't be onYouTube trying to sell it to you,
you know what I mean?
Or on Sirius XM trying to sellit to you.
That's where Ponzi schemesstart a lot of times.
So we're gonna talk A littlebit about that and then yeah, just
(04:47):
we're gonna.
Everything we talk about todayis a real life case and it's where
the kind of the industry runsamok on people.
Yeah.
So four years in, this is theclosest we're going to get to a murder
mystery podcast where we'regoing to read you headlines and talk
about through stories whichthey do on these popular podcasts
and what they really mean tobring context to you.
And so if you're brand new,welcome to Ditch with Suits.
Who's these popular podcasts?
(05:08):
Yeah, Murder mystery podcast.
Oh, Murder mystery podcast.
Yeah, where they like talkabout cases and they say in 1985
this guy.
We have to use like different voices.
Okay, we'll do that.
I'll try to use my Batmanvoice, but this is Ditch the Suits.
I'm Steve Campbell, yoursenior marketing director at Seed
Planning Group.
Travis, the guy who's beentalking, he is our CEO.
Seed is a fee only financialplanning firm.
(05:28):
So this show is all aboutthings like bringing financial topics
that can help empower you withyour life.
But some of the most popularepisodes we've ever had is just talking
about what's circulating outin the media, what's happening in
the news.
So again, you can get the mostmoney in life by understanding what
do these things mean and howdoes it affect you if you're working
a 9 to 5 or you own abusiness, when you hear stuff like
this and when you're talkingabout trust, it's really important.
(05:49):
So we're going to bring fromour standpoint what we've seen over
the years working withindividuals to try to help them that
are calling us.
Travis, should I be concernedabout this?
Is this something I need topay attention to to reframe what's
really important?
And at the end of the day,we've been talking about trust.
So with Ditch the Suits, we'regoing to talk about esg, some of
these topics.
So Travis, where do you wantto start for today with some of these
(06:11):
articles?
Mofo.com let's take a quickbreak to.
Hear a word from your sponsor.
This episode is brought to youby Seed Planning Group.
If you're looking for a lifegiving experience working with a
financial planner, then Seedis here for you.
Seed is a fee only financialplanning firm with a fiduciary obligation
to put your best interests first.
(06:33):
If your goal is financialfreedom and independence without
sales products or reallyglorified salespeople, then check
out Seed Planning Group todayyou can visit www.seedpg.com that's
www.seedpg.com.
and the best part, you canschedule a free consultation to find
out if their fee only plannersand their process are right for you.
(06:54):
It's a real place.
It's a real article.
Mofo.com ran an article onInvesco Advisors Pay 17.5 Million
Civil Penalty to resolveclaims of allegedly misleading statements
involving ESG investment funds.
So the first thing is this isa settlement.
So we're not saying that theydid anything wrong or didn't do anything
wrong, but they got accused ofdoing something wrong and then they
(07:16):
paid money to make it go away,basically to stop it.
So you can infer whatever youwant out of it.
But as we talk about this,it's somebody probably did something
wrong.
On November 8, 2024, the SECcharged Invesco Advisors, Inc.
(07:37):
We'll call them Invesco, goingforward with making allegedly misleading
statements about thepercentage of assets under management.
So in our industry, that'scalled aum.
That included environmental,social and governance, which is ESG
factors in investment decisions.
And according to the orderbetween April 20 through July 22,
(07:57):
Invesco included materiallymisleading statements that ESG factors
were integrated into 70.
Between 70 and 94% of their AUM.
So what they are saying isthat let's just pretend they were
managing $100 billion in AUMassets under management.
(08:18):
What they are saying isbetween 70 and 94%, which is a really
wide range.
So I'm not even sure how youget away with that.
Between 70 and 94% had sometype of ESG factor being used in
the funds.
That's extraordinary.
That is.
That is a lot for kind of justInvesco is a giant mutual fund company.
(08:42):
So they have lots of mutualfund companies.
Mutual funds think likeVanguard or Fidelity or T.
Rowe Price or American Funds.
That's.
That's Invesco for you.
Yeah.
And I think that'sfascinating, right, because we've
talked about ESG and whypeople have typically invested in
ESG because they want topotentially align their money with
their values and make surethat they're very noble of the investments.
(09:03):
It is very noble.
But as we've kind of talkedabout our industry, it's been soured
in so many ways becausecompanies kind of misleading.
And then you pay all of this money.
I mean, if you say thatsomething's ESG when it's really
not as an investor, like, howdo you also make sense of something
when you can't pinpoint it?
And it goes back to the ideaof Trust.
If you tell me, Travis, thatthis is esg, I.
(09:25):
I'm trying to believe you.
But then when they actuallyaudited and looked at it, they discovered
they must have, that they wereoff and what they were.
The SEC has made a big pushover the last couple of years to
look at people who are sayingthey were doing ESG investing and
saying, but what does thatmean, right?
So if you do ESG investing,what is the thesis and what are you
(09:45):
buying?
What are you not buying?
And is that actually what'sshowing up in the portfolio?
Or are you just telling people that?
And because they don't knowhow to decompose a mutual fund or
something, they can't, youknow, they can.
They don't know exactly ifyou're following these mandates or
not.
And what they found is that alot of firms out there are saying
that they're ESG or sociallyresponsible, but you can't tell the
(10:07):
difference between that andany other investment.
And part of the reason is itis investment.
It's a thing called style drift.
And it's something that youlook at when you look at a money
manager is you told me this isyour investment thesis, but because
the performance was bad, youstarted to doing this other stuff
over here to try to make upthe difference.
So you said you were going tobe esg, but you couldn't.
(10:28):
In the last year, a lot of thetech stocks aren't esg, so the ESG
portfolio wasn't performing.
So you started buying me thetech stocks, which actually wouldn't
match the definition of ESGyou had sold me on in the first place.
So now I have a portfolio.
I'm paying you for aportfolio, and I'm trusting you for
this portfolio that I believematches up with the values that you
(10:49):
had advertised.
But I'm getting somethingvery, very different.
So that's where the issue is.
The order found that thepercentages Invesco shared included
Invesco's passive exchangetraded funds or their ETFs.
So ETFs are like mutual fundsthat sell in the middle of the day.
Mutual funds always sell at night.
ETFs you can buy and sell justlike a stock, but it looks like a
(11:11):
mutual fund.
And when they say passive,they're talking like indexes.
So it's AN S&P 500 ETF.
So it's like an S&P 500 indexmutual fund, only it sells in the
middle of the day or wheneveryou want to sell it.
They were misleading becausethe ETFs did not consider ESG factors
in the investment decisions.
By their passive nature, theycould not take those factors into
(11:33):
consideration.
An example, the order notedthat Invesco's percentages include
Invesco QQQ.
I don't know what that is.
A passive ETF that tracks theNASDAQ 100.
So the NASDAQ 100 is an index.
It's a subset of stocks already.
So they have a fund thattracks that.
So it's buying the exact samestuff that's in it.
(11:55):
And they're saying that it's esg.
Well, if it was esg, you wouldhave to exclude some of the funds
from that.
So you could say we try totrack that, but we've subtracted,
you know, 10 of the holdingsor something because they don't meet
our guidelines or somethinglike that.
But they didn't do it.
They just said, this is ourNASDAQ 100 fund and it's ESG.
(12:16):
Yeah, because when you, when you.
Or that's what's alleged.
Companies are supposed to beable to meet a number of different
standards to prove that theyare environmentally, socially governance
fitting.
And within these.
And these could be things,child labor laws.
This could be the way thatthey produce certain goods.
They have to be able to checkand show that they're able to do
this.
So if you basically are nowmoonlighting and say, hey, we're
(12:38):
labeling this as esg, eventhough it's following an index where
the companies aren't aligning,I think again, when it goes back
to trust, I think when you'retalking about investing, sometimes
it's hard for people.
Like, what are we talking about?
This would be the equivalentof you buying a certain type of groceries,
believing that something isorganic or grass fed for a period
of time.
And then, you know, monthsinto it, you're learning.
(12:58):
Well, the farmers actuallykind of lied and they've been using
this source of.
Meat or it's not grassfinished, it's grass.
It's not exactly what we're.
Till the last month of itslife and then we pump it full of
hormones and.
Or I'm thinking about, I thinkit was years ago, Volkswagen got
into hot water because theysaid that their certain car emission
system was leading in terms ofsafety and pollution.
(13:19):
And then it came out whereVolkswagen basically just said, we
actually kind of lied.
Yeah.
Oh, I remember people that.
People that bought the carswere, were demanding lawsuits because
they bought the car with theintention that they were being told
you're helping the environment.
To only come to find outVolkswagen Said our bad, we've actually
been using different emission statements.
(13:39):
So when it comes to investing,we're just trying to frame it that
there was a company that washolding itself out as being environmentally
centric with esg, while at theend of the day, especially in large
amounts of money, not quitemeeting what someone was buying into
under the premise of this isaligning my values with my money.
Yeah.
And so the SEC also know that,and this is a little ticky tack,
(14:02):
the SEC noted that Invesco hadno comprehensive.
So the comprehensive is alittle bit from a regulatory body,
a little bit of an unfair termset of written policies and procedures
concerning how Invescomeasured ESG integration.
So Invesco may have had adefinition of what they consider
(14:23):
esg, and maybe it just doesn'tmatch up with what everybody else
considers esg.
Right.
However, the SEC did not thinkthat it was a comprehensive set of
written policies and procedures.
So that's a little bit hardwhen you read any of these things.
You gotta kinda like readbetween the lines.
So really, Invesco could havehad some standards, some firm standards,
(14:45):
but they weren't comprehensiveenough, or maybe they weren't, you
know, formalized enough.
But certainly it does looklike they maybe dropped the ball
here.
So, you know, the second partof it, they definitely have to develop
that stuff.
But more importantly, I mean,I would assume that they definitely
have what they consider esgbecause they're saying they're esg.
Right.
So if somebody goes to theirwebsite and says, what's esg?
(15:09):
They're going to explain whatESG is in lieu of anything else.
That's the definition.
So kind of looks like it waseasy picking, but a lot of firms
got in trouble for that.
Now, if you're what we'retalking about, worried about trust
and can you trust your advisor?
Well, here's an entire companythat is kind of corrupted in the
sense that ESG is a hot button topic.
(15:30):
So we'll just say everything's esg.
We have more ESG thaneverybody else.
So you'll come and buy our funds.
Because when you look at thefund, you have no way to tell if
it's actually esg.
Unless you have some analytic tools.
Yeah.
And you go back to that ideaof trust if you're an advisor that
manages managers in the storythat you were told by a wholesaler
(15:51):
is, we at this companyprimarily use ESG centric mutual
funds.
And here's why that's important.
And the advisor turns aroundand tells Mr.
And Mrs.
Jones, hey, you know how yousaid ESG is really important?
I found a company that's gonnamatch what you're trying to do to
only find out years later.
And then 70 to 94% they were off.
(16:11):
Right.
It does create mistrust in thesense that if you say you're gonna
do something in anything inlife and you don't do it, what are
the ramifications?
And trust is gonna be broken.
And so ESG is one of thoseareas where companies can tout their
flag and say, we're leading inthis area, and you would want it
to be accurate, but when it'snot, it really does raise a red flag.
(16:34):
That that was the one thingyou said you were going to really
do well in, and you didn't.
And that's part of the reasonwhy we addressed our program.
We looked at the way that theratings companies were looking at
companies, individualcompanies, and we were saying, there's
no consistency.
It's a black box.
We can't figure out whatthey're talking about and why companies
are positive and environmentalone month and negative the next month.
(16:57):
And it looked way political.
And so we said, look, esg, ifyou go back to that episode, I think
what people are really sayingis, I have values that I want to
invest by.
Help me invest by my values.
You don't need a company topackage your values for you.
You need a company to listento you and say, what's important
(17:18):
to you?
How do we help you achievewhat's important to you?
And if you want somethingspecial, what's it going to cost
a lot of people?
I want something special.
This is what it's gonna cost.
Okay?
I don't want it that bad.
Or, yes, I'd be willing to payfor that.
But that's an honestconversation versus, you know, just
trust me, just trust me.
I don't trust anybody likethat, Right.
(17:38):
I just don't.
I wanna know what's behind it, right?
Like, show me what's behind it.
You don't go into a jewelrystore and say, I'd like that ring.
And, you know, look at it andthere's no price on it.
And then you go, okay.
And they're sizing you up andyou go, what's the price?
They're like, for you it's $4,000.
And then the next person comesin and they go, oh, for you, it's
1000.
(17:59):
That would infuriate you.
Yet that's kind of whathappens with some of the stuff in
the financial world.
So to Invesco's defense, theSEC charged Invesco with willful
violation of the InvestmentAdvisors act of 1940.
But without admitting ordenying the SEC's finding, Invesco
agreed to a cease and desistand to pay $17.5 million civil penalty.
(18:22):
So basically, Invesco said, wewon't advertise that anymore.
We're not gonna do that.
We'll kind of clean up our act.
So optically it looks better.
And we're not misleadingpeople, or we're not accidentally
misleading people if that'snot what they meant to do.
So I think that that'simportant because it's not like this
was a court case that got proven.
You know, it kind of lookslike they did something wrong, but
(18:44):
it, you know, with all thosethings, you always have to make a
decision, do we just want tosettle or.
And, you know, you could say,would they settle for $17.5 million?
When you're talking aboutfirms that manage billions of dollars,
you know, that's, that'sactually a drop in a bucket.
And the hardest thing is,though, that doesn't fix the investors
who got violated.
That's the worst part.
If an investor actually gotviolated, that money's not fixing
(19:07):
their situation.
Yeah, because we've talkedabout, too, with esg.
I think if you have a plannerthat's advocating in your behalf
and they say, this isimportant to me, it's also aligning
back to, well, what do youneed to live?
And how does this money factorinto it?
And so if you had somebodythat's brave enough to raise their
hand and say, I want to dothis, to only have a company not
uphold their side of thebargain, I think is a challenge.
(19:29):
But let's get into the.
To the juicy one here.
Why don't you talk to us maybeabout this next one.
Justice.gov Eastern Districtin North Carolina.
This is my.
This is your voice.
This is my voice.
Okay.
Eastern District of NorthCarolina Rally Investment.
Awesome.
40 changed.
40.
(19:50):
Okay, stop it.
40.
Okay.
Eastern District of NorthCarolina, Raleigh Investment Advisors.
40 year sentence or Ponzischeme and obstruction affirmed on
appeal.
United States Department of Justice.
So I happen to know about this one.
I'll read the story first andthen I'll tell you what he was actually
(20:11):
doing, okay?
Because it's disgusting.
And this is back to the beginning.
Remember when we said if it'stoo good to be true, somebody promises
you they have a special kindof investment, they're going to take
care.
Guaranteed return.
Super safe.
No worries.
Make a lot of money as soon asyou hear that like, you know, if
you want you can slap them,but at best you should turn around
(20:33):
and walk out the door, right?
Or at the least, here's thebasically synopsis of the story.
Raleigh investment advisor's40 year sentence for Ponzi scheme
and obstruction affirmed onappeal that was September.
The Original case wasSeptember 9, 2021.
Stephen Condon Peters, aformer investment advisor and owner
of Vision Quest WealthManagement, lost his appeal today
(20:56):
in a some legal word opinionissued by the United States Court
of Appeals for the 4th Circuit.
The judge against Peters,which included the judgment against
Peters, which included a 40year prison sentence, 15 million
and change in restitution andforfeiture of assets, was fully affirmed.
(21:20):
So basically he got convictedback in 2021 and then he tried to
appeal it and they said nah,you were bad, you're gonna pay people
back.
Now the problem is that mostof that $15 million is not recoverable.
They seized a bunch of us.
He had a horse farm, he had ahouse in South America, Costa Rica
(21:42):
that he had built with some ofthis money.
He had some artwork and stuff,but most of the money they never
got back.
Peters was convicted on allcharges against him in a week long
trial in 2019.
The evidence showed thatPeters, in his role as a registered
investment advisor, defraudedhis numerous clients by steering
them into investments in whichPeters had a direct financial interest.
He then compounded his crimesby attempting to defraud the SEC
(22:03):
with false documents and statements.
At sentencing, the judgecommented on Peters crimes were breathtaking
but were proven with a tsunamiof evidence in issuing his 40 year
sentence.
The court also noted thatPeters quadrupled down on the crime
by among other things,perjuring himself at trial.
What he was doing was he had awhole bunch of different companies,
(22:27):
kind of like shell companies,like LLCs and Stuff, including his
firm.
And he was going to retirementage investors and he was getting
them to give him loans andpromising like really high interest
rates, like I'm going to giveyou 8% interest, you give me a loan
(22:49):
and I'm going to use that to,to go out and expand the business
and that's how you're gonnamake your money.
But what he was doing isSteve, he was taking a loan from
you and then he was taking aloan from your mom and then when
you wanted money back, he'dalready spent the money he took from
you.
So he gave you his mom's moneyor your mom's money.
(23:10):
Right?
It was just a Ponzi scheme.
He was basically doing and howhe was selling it is he was telling
people, well, it's backed bymy company.
My company is really secure.
So you go to this financial advisor.
You trust him.
He looks the part.
He had some good pedigreewithin the industry, had worked for
some big mutual fund companiesor investment managers, whatever.
(23:32):
I think he was an ex.
He was a retired military ofsome degree, or he had spent some
time in the military.
So he had all the parts.
He looked good, he looked trustworthy.
And he was like, you couldtrust me.
I'm gonna.
You know, you can get this.
You're gonna make 8% on this.
You're giving the money to me.
You can trust me.
You're gonna be backed by my company.
(23:52):
Well, when you look at thecompany, there's nothing in the company.
So what he was doing is takinga loan.
He was paying it out from thecompany to himself and spending the
money on whatever.
And eventually, I don't knowhow it got turned in, but eventually
it made its way to the sec.
Probably what happened ispeople went to him and said, hey,
I need my money back.
And he wouldn't give it back,or he was locking it up.
But could you imagine, youhave $500,000 and somebody comes
(24:16):
in and sells you a couplehundred thousand dollars worth of
these loans, and it goes bellyup, and you never get that money
back.
And that was your retirement money.
And I Googled Ponzi scheme, Igoogled financial fraud to kind of
like, look at some of thecases and stuff.
And you can literally Google2024 Ponzi schemes, 2023 Ponzi schemes,
(24:37):
2022 Ponzi schemes.
They're all shapes and sizes,but a lot of times, oh, they told
me that I was getting 7% on myCD or I could buy this fund and I
would get a guaranteed 10%,you know, and there was no risk to
it.
Or, you know, I give them aloan and they were going to invest
in these properties for me.
You don't need any of thatstuff, first and foremost.
(24:59):
Secondly, do you really think.
And people do think this, butthere's guys out there that are registered,
that have the same licenses aseverybody else, but they somehow
have some kind of magicinvestment that nobody else has.
And they happen to be anindependent firm with no big brother
(25:22):
kind of looking over them, andyou're writing a check to them.
Bernie Madoff, like, you go towork with him and you write a check
to Bernie Madoff.
Then you get like ahandwritten statement, right?
And this is like the airplanesin September 11, we don't think to
put a door in the cockpituntil the plane crashes.
It's Bernie Madoff.
It's like, maybe you shouldn'twrite a check to Bernie Madoff, you
(25:44):
know, or maybe when you getstatements that shows exactly 16%
return for like five years ina row, you should be going, no, no,
this isn't good.
But it happens.
And that's why you don't havetrust in the industry.
But how do you protect yourself?
You're not hiring.
When you take your money andinvest your money with somebody,
(26:05):
you can't be lazy.
You got to do due diligence.
But think about it from astandpoint of who are you writing
the check to and how do youknow that that money's going to be
there for you?
There's so many firms to work with.
If a firm says, you write yourcheck to us, you know, I.
To me, that's a concerning issue.
(26:26):
Now, there could be situationswhere they're a trustee or something
and there's some due diligenceyou can do on that.
But you know, when it comeswith some kind of underlying like
guarantee or you can trust me,or these interest rates are higher
than any place else you canget them, man, that's.
Well, it's upsetting, right,because individuals are going out
(26:47):
and they're trying to find atrusted professional.
And when you have a situationlike this, not only is it painful
for the individuals thatexperience the loss because an individual
took advantage of them, butthen how it sours the entire experience
of an industry where people nolonger want to hire somebody because
they've read horror storieslike this.
Now they're few and far between.
(27:08):
But that's the whole idea of trust.
And people are trying to getrich quick or get a heads up on somebody
without paying attention.
I think you've done a reallynice job over the last few years
of really helping peopleunderstand the small decisions that
you make make and make a hugeoutcome over your lifetime.
And I think that's kind of thegenesis of why we called this ditch
the suits, because you'regoing to get into it here in just
(27:30):
a second.
But we were raised in anindustry that said you got to look
the part, you got to dress thepart, and that's what sells people
on trust.
When at the end of the day, wefigured out that if you just do a
lot of good by a lot of peopleand tell the truth and help them,
then you're going to helppeople solve their problem.
And people need to stoplooking for sexy Right.
Like, sexy seems to sell inthe investment world.
(27:52):
Alternatives, you got to have alternatives.
You got to have hedge funds,you got to have this, that, and the
other thing.
The truth about investing.
You're trying to buy a cut ofa company for a good price so that
the future earnings, you get agood share of those.
It's all you're trying to do.
You're trying to get a cut ofthe future earnings of a company
(28:13):
and you want to get a goodprice on it.
You don't need really sexythings that you don't understand
that are guaranteed by whoknows what.
If it's too good to be true,don't trust it.
It's the marketing machine.
Watch out for the marketing machine.
If an advisor offers yousomething special and the returns
are really special and they'resomehow involved in creating the
(28:36):
investment, you know, that'sone of those slap them in the face
or walk away moments.
You know, it's just they'rethinking that you're dumb.
Honestly, that's what they're doing.
And almost all these Ponzischemes, when you read about them,
they're all cooked up atsomebody's got.
And they're convincing people.
You would think, how wouldgood people fall for it?
(28:57):
People fall for it all thetime because they trust.
I trust him.
So and so introduced me tothat person and I just trusted them.
I didn't know better.
Somebody like us, we're goingto look at that situation and go,
that's just blatantly illegal.
Because we know, we know youcan't do that.
But the typical person's like,I didn't know they couldn't do it.
(29:18):
You know, they said they could.
They're registered.
Well, and you've done a reallynice job these last two episodes.
Again, there was an.
If you just jumped into thisone today, right?
We talked about theunfortunate misdoings of professionals
and companies that can takeadvantage of individuals.
But it was really around thisidea of what we talked about in our
last episode.
Which is what's moreimportant, trust or performance?
(29:40):
If you missed that episode, goback and listen to it.
I think it was a prettyinteresting look at our industry
and what people that voted inthe survey, what they thought was
important.
But we also told you that inthe show notes, we'll include it
for this one, too.
We have our own little minisurvey for ditch the suits as Travis
and I would love to hear fromyou again.
You don't have to put yourname next to it.
But what is important to youwhen you hear Stories like this,
(30:01):
when you do go out to find afinancial adviser, what are the qualities
or what are you looking for inan individual?
And then also, what wouldcause you to ever leave somebody?
You know, it's your money andit's your life.
And we started this show tohelp empower you with the financial
planning, education, and thethings you can do to avoid situations
like this where you're waitingon the next big thing to help you
survive.
(30:22):
If you just do some reallysmall things one after the other,
and you're proactive and yourun the money business that Travis
always talks about and you dothe right things year in and year
out, you're going to get aheadin life.
So if you have questions oryou have situations where you're
like, guys, I don't know ifI'm being taken advantage of.
Get in touch with Travis andI, you know, reach out to us.
Head over to ditchesuits.com,fill out the contact form.
It doesn't mean younecessarily have to hire seed or
(30:44):
work with us, but if you justgot questions, get in touch with
us.
We're real people, just like you.
This is a fun one.
And again, part of 2025, wegot some amazing guests lined up
for you guys, so you're notgoing to want to miss subscribe to
this show.
So you never miss an episodeof Ditch the Suits.
And as always, thanks forbeing our guest.
Thanks for checking out Ditchthe Suits.
Be sure to write a review ordrop a comment about this episode.
(31:04):
And if you want more like this.
Head over to ditchesuits.comyoum can send us a message and get
in touch.
Let us know how we can helpand be sure to share any topics you'd
be interested in having uscover on the show.
We're here to help you get themost from your money in life.
Thanks for being our guest andchecking out Ditch the Suits.
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