Save Money Don’t let others pick your financial adviser

Gaylen Rust must have seemed trustworthy to the people who gave him money. Rust was a longtime businessman in Layton, Utah, where he ran a coin shop started by his father in 1966.

Federal and state regulators, however, say Rust was running a Ponzi scheme. Civil lawsuits filed late last year say Rust, his wife and one of his five children persuaded hundreds of friends, customers and business associates across the country to invest more than $200 million in a bogus silver trading pool.

When scam artists target groups of people who know each other or have something else in common, such as religion, it’s known as “affinity fraud.” And it’s one big reason why you shouldn’t rely solely on recommendations from friends and family when choosing a financial adviser.

“If anything, word-of-mouth recommendations are even more important to the con artists than to the legitimate adviser,” said Barbara Roper, director of investor protection for the Consumer Federation of America.

To protect yourself, Roper recommends the following steps to vet financial advisers: Make sure the adviser is properly registered; take any disciplinary history seriously; and look for, and verify, the right credentials.

You can check out any unfamiliar credentials at FINRA’S site to see how much effort and education is required to obtain them, Roper suggests. — Nerdwallet