Not too long ago Bernie Madoff was convicted for operating a $50 billion Ponzi scheme. I’ve been in the business of financial planning for a long, long time, and this is not the first Ponzi scheme I’ve seen; it seems like they come around pretty regularly, but this is by far the biggest one that we have experienced in our economy.

A Ponzi scheme is basically where someone brings in money, promising a return, and then they pay those returns with other investors’ money brought in under the same false premise. So they promise a return, they get your money, they give that money to someone else, and say that it’s an economic return. That’s a Ponzi scheme.

There really is no economic gain, it’s just paying off other investors with new money. What can you do to avoid getting caught up in something like that?

First of all, ask who is the advisor accountable to? The big problem on this particular scheme and in most of them is there is no real accountability for the advisor. This advisor had nobody that he was accountable to. He had total authority to do anything with these people’s money without accountability. That’s a recipe for disaster.

Second, you need to look for an advisor who shares your value system. And, I would suggest that you interview more than one investment advisor. There’s an organization, Kingdom Advisors, which qualifies Christian financial advisors, putting them through training and a qualification process. You can find a Christian financial advisors in your area by going on to their website: www.KingdomAdvisors.com and putting in your zip code.

But I still say interview more than one advisor. You don’t always have a personality match with an advisor. It may be that you want somebody young. Maybe you want a woman. Make sure you know what the criteria are you are looking for in an advisor. And, shop around.

When you get investment advice, it’s ok to check it out with someone else and ask him or her what they think about that particular investment. And, I would say this also, just because someone is a Christian, does not make him or her a good investment counselor. Just because someone is a Christian does not make him or her a good airplane pilot. There are certain skills that come with various professions. So don’t just trust somebody just because they are a Christian or they purport to be a Christian.

Photo Credit:  Danie van der Merwe

Some of the worst Ponzi schemes have occurred in the church because people trusted somebody in a way that they should not have trusted them. They gave them total authority. Because they were a Christian, the other Christian believed everything that they said. You can’t do that.

Finally, I would say this: before you make any investment, pray about it. Pray about it, ask someone else for his or her wisdom before you make those investments. That’s probably the best way to avoid the schemes. There will be another scheme tomorrow. There will be another scheme a month from now. There will be another scheme a year from now. Some of them will be in the church; some of them will be on Wall Street. But, God has promised to give you discernment. And, I would say: ask for it.