Boy band architect Lou Pearlman is singing “Baby, Bye Bye Bye,” to his freedom.
On March 4, the business brain behind the Backstreet Boys and ‘NSync pled guilty to federal charges that he bilked more than $300 million from investors and banks. (No wonder Justin Timberlake once told Rolling Stone: “I was...monetarily raped by a Svengali.”) Pearlman, who is in jail without bail, faces up to 25 years incarceration and a $1 million fine. Pearlman's schemes included selling bogus stocks and inviting people to pay into a made-up employee investment savings program that promised large returns. He's now promised to help prosecutors recover some of his ill-got gains. Good luck.
Stars rely on business advisers to handle their money, and as Timberlake will tell you, it is important to know you can trust them. How well do you know your financial adviser? Experts recommend that you consider potential financial advisers the way you would a potential employee, after all you are hiring them to take care of your money.
Treat them like job applicants, create your own hiring committee, and check references, says Neil Elmouchi, president of San Ramon, California-based Summit Financial Consultants. Elmouchi suggests asking a few people you admire professionally to interview your potential financial adviser as well. “It’s just like interviewing at a corporation. You need extra interviewers who can be astute.”
An easy background check is to request an adviser's Form ADV, says Robert Wasilewski, of Baltimore-Washington Financial Advisors in Maryland. Advisers use the two part form to register with the SEC. Part 1, which can also be located online, summarizes an adviser's education and their last ten years of business and disciplinary history. Form 2, which is not online, includes fee and investment strategy information. “A financial adviser should provide you with an ADV form,” says Wasilewski.