Five Ways to Avoid Getting Madoffed

At the end of the day, it's your money. Make sure you invest in a vehicle that allows for timely and unrestricted liquidation.

5. Do You Understand the Investment Strategy?

Ask your investment advisor what their strategy is? Understand the basics by which your money will be managed. For example, is the investment in a growth and value; long/short; convertible arbitrage; or technical analysis strategy?

You don't have to know the every detail or all the mathematics behind how the money is managed, but some knowledge about the general strategy should be mandatory. Make sure that the investment advisor is willing to provide the necessary time to explain to you what their strategy is. If they hide behind a veil of secrecy (as Madoff did), then you should be wary.

My strategies and investment philosophies are clearly stated in brochures that I provide to all potential investors.

Being an informed consumer expands the role of being a savvy investor. There are many honest and hard-working investment advisors to choose from. Do your due diligence by researching and interviewing the advisor before you send over any of your money.

Finally, one of the biggest mistakes that Madoff's investors made was to invest an overwhelming amount of their assets with Madoff. It is as important to diversify among investment advisors as it is to diversify amongst investments.

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