It's that very point that federal attorneys raised when charging Starr on Thursday.
"He made it seem as if it was a very exclusive thing to invest with his company," said U.S. Attorney Preet Bharara.
Even if an investor is eager to vet an advisor, they may feel stymied. That's because there's very little information available on the track record of financial pros. Investors don't have a Morningstar-type rating system to consult. At best, they might come upon hard-to-find [and often hard-to-decipher] online tools, courtesy of the Financial Industry Regulatory Authority or the Securities and Exchange Commission.
"They require a fair amount of initiative on the part of investors to use them," said Barbara Roper, director of investor protection at the Consumer Federation of America.
Until that changes, Roper and many advisors caution investors to be wary of any obvious red flags, such as an advisor who refuses to place a client's money in a custodial account or an advisor who demands the ability to purchase investments on a client's behalf. All good advisors keep a wall between themselves and their client's money.
And as Roper concludes, investors should never consult an advisor simply on the basis of word-of-mouth.
"You don't hire someone just because your buddy says he's a good guy," she said.
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