Which Do Fraudsters Prefer: Cash or Crypto?

Plus... Who can call themselves a financial planner? Self-Care with Jean Edelman: Let your Liver help you get ready for Spring

In other words, for every dollar used in crypto, one tenth of one penny is involved in illegal activities and that's a decline from 2021 of 0.15%. So when people try to tell you that crypto is used for nothing but bad stuff, that's utter nonsense. And oh by the way, the World Bank says that 3% to 5% of the entire world's GDP is illicit transactions. I don't see anybody telling us we ought to cancel cash. Why is anybody being critical of crypto?  

So where is it that crypto is being used illegally? Well, number one, ransomware. This is where you open your computer one day and you get an error message telling you that hackers have infiltrated your computer. They've locked all your files. And if you want to get them back, you have to pay them ransom. And they demand to be paid in Bitcoin because Bitcoin supposedly is anonymous and can't be tracked.  

Well, ransomware revenue fell by nearly half last year. Why? Because victims are now refusing to pay. 60% of victims did not pay last year. And as a result, the crooks got only about half of the revenue in 2022 that they got in 2021, about $450 million. Yeah, that's still a big number. But tiny when you look at the total amount of fraud in the world. In fact, one neat trick, the Dutch national police tricked one ransomware gang into revealing their secret code, and as a result, the police were able to get full recovery for hundreds of victims. Yeah, criminals are not always terribly bright. Criminal balances, according to Chainalysis, plummeted last year from $12 billion to less than $3 billion, and crypto scam revenue fell nearly 50% in 2022. You know what's fascinating is that crypto crooks use the very same types of frauds and scams and cons that they use in every other form of money. Cash stocks, bonds, gold, real estate, oil, commodities, you name it. Crooks are going to do whatever they can to separate you from your money.   

 What’s the top scam in the crypto world? The romance scam. This is where a crook contacts you on social media, often on a dating site or some other chatroom, and they buddy up to you. They get to know you and you eventually lower your defenses. You think you're developing a relationship with this person. Eventually, though, they tell you that they've run into some kind of money problem and can you help them out? The average victim of the romance scam lost $16,000 last year, according to Chainalysis. That's three times more money than any other scam methodology. And probably the losses are a lot worse than $16,000 per person because a lot of people are too embarrassed to admit that they've lost money this way.   

 The number two scam is the giveaway scam. Fraudsters promise to send you crypto after you send them some of yours. And these crooks often impersonate celebrities like Taylor Swift, sending you an email promising that if you send her a bitcoin, she'll send you two bitcoins in return. Does that make any sense? How would Taylor Swift get your email anyway? Why would she bother? And why on earth would she offer to send you two bitcoins in exchange for you giving her one? Why would anybody anywhere do that at any time legitimately? It's illegitimate. Of course, you send in your one Bitcoin - you're not sending it to Taylor Swift. She knows nothing about this. Somebody is impersonating her. And the bitcoin you sent off to that unknown web address? Well, that's a bitcoin you will never see again. And considering a bitcoin is now about $23,000, that's a pretty big financial loss. So you've got to watch out for those giveaway scams.  

 And related to that, the impersonation scam. This is where fraudsters pretend not to be celebrities, but to be an IRS agent or somebody from the Social Security office. They tell you you've got some kind of problem. And if you want to avoid going to jail or getting hit with big taxes, you better send in some crypto to make the problem go away. These crooks make themselves look like the real deal, but in fact, they're nothing but impersonators and forgers. And then there are routine, ordinary, everyday investment scams where a fraudster promises to give you some outlandish return from a fake investment. They'll double your money in a day, triple it in a month, and they want you to send in your money via Bitcoin or Ethereum or some other digital asset, and you never see the crook or your money again.  

Next we have a scam that finally is indeed unique to crypto. This is an NFT scam. NFTs, non-fungible tokens, these are inventions of blockchain technology and they're the hot new thing in crypto these days. Crooks are now telling you that they'll let you buy one of their NFTs that they claim has a huge value and is rapidly rising in price, when in fact the NFT that they're selling you is either worthless or it doesn't exist at all.  

  So you've got to watch out for crypto fraud the same way. You've got to watch out for stock fraud or any other type of scam or con. The only good news I can share with you in all of this is that the likelihood of you being ripped off in crypto is dramatically less than you being ripped off elsewhere.  

Who can call themselves a financial planner? 

Ric’s interview with Patrick Mahoney, CEO of the Financial Planning Association 

Ric Edelman: We have talked about the fact that the financial planning industry is an industry. It's a business. Frankly, many would argue it's a profession. And to help us talk about that and the implications for you as an investor and for you as an investment advisor, I'm happy to bring on to the program Patrick Mahoney. He is the CEO of the Financial Planning Association. Patrick, great to have you on the program. Great to be with.  

 Patrick Mahoney: Thanks you, Ric.  

 Ric Edelman: So let's really focus in on that. Patrick, you are a champion of the fact that the financial planning profession is in fact that a profession. So talk about your position on this and what you're having spearheading, leading the FPA doing about that.  

 Patrick Mahoney: Well, we believe that financial planning is a profession similar to other noble professions that help society like medicine, law, theology. We view it as one of the great professions. There's very few professions Ric that relationships that are as intimate that you can have apart from your physician, apart from your attorney, and perhaps apart from your spiritual advisor. Right up there with that is when you lay it all on the table with your financial planner. If you have a good relationship with your planner, you're being very, very open. You're being open to positive things; you're being open to objective observations and you're being open to coaching and you're being receptive to that. And in order to do that, what those four professions have in common, including financial planning, is a basis of trust. You have to trust your planner that they're in the arena for you and you have to be willing to be open to them. And the way to do that, the planner builds his or her trust with you in terms of mapping out what's best for you. So we really do believe that a financial planner is a is a true profession. The dilemma in the United States, of course, is that financial planning hasn't necessarily been viewed as a profession in and of itself, and that's the focus of FPA.  

 Ric Edelman: Yeah, that's exactly right. On both points that you just raised, I can certainly attest, having been a financial planner for decades, that we develop very intimate relationships with our clients. We discover that our clients tell us things that they have never told another person because we're dealing with their, their very deepest fears as well as their most profound aspirations. They are facing their future. That's what financial planning is all about, is focusing on where they're headed, where they're going to be going and dealing with their career, their marriage, their children, their parents. This is some of the most profound emotions. I once did an informal survey in my office of my colleagues and asked, How often do clients cry when you're meeting with them? And the anecdotal response was about 30% of the time, every advisor in my office has a box of tissues by the client's chair because it's so common. We're talking about very important aspects. It's not just about investment management. It's about their deepest, as I mentioned, fears and aspirations. And that is something that only comes with trust. When you feel confident in your ability to confide in someone of such a nature. But unlike the other professions, medicine and law, and I would even perhaps maybe throw in accounting here, they are very heavily regulated. They are acknowledged by federal and state regulators. They have examinations that they have to pass. They have ongoing legal liability and responsibility for continuing education and so on. And in our world, on Wall Street advisors, brokers and insurance agents, there are licensing obligations, but those are for the investment and insurance worlds, not for the planning world. The SEC, FINRA, CFTC, the Fed, the IRS. Nobody acknowledges or pays any attention to the planning element of this. In fact, anybody, as you know, and I think this is one of your pet peeves, Patrick, is that anybody can call themselves a financial planner.  

 Patrick Mahoney: That's correct. You can hang out your shingle this morning with no experience as a planner. Call yourself a planner, and then whoever comes in your office to accept your services, they're at your mercy.  

 Ric Edelman: And so how do you reconcile the fact that you regard and I share your belief that financial planning is a profession with the fact that anybody without any credentials, experience, licensing, abilities, knowledge, skills can call themselves a planner. How do we reconcile those two seemingly opposing points?  

 Patrick Mahoney: Well, our approach to reconciling that dilemma is to protect the title when I go around the country and I speak with members of FPA whenever we get on this topic, it inevitably follows the following narrative… “You know, Patrick, I have all my credentialing. I manage my affairs and with high degree of integrity, just like you Ric. I expect my people to conduct themselves with high integrity. I deliver 360 degree plans to my clients. This is a vocation to which I believe I have been called. I love doing this. I found that I wasn't taught how to do it. It wasn't something my high school guidance counselor taught me to do. I found it on my own. It's my way of helping others. I believe in this. But that person across the street, He only does 10% of what I do. But he calls himself a financial planner. You're the head of my trade association, Patrick. What are you doing to help me to ensure that I can make a living as a planner?...” 

And Ric. It's a fair question. And that led to a debate at the board level here at about what the meaning of title protection would be, what the meaning, what it meant to be a financial planner. And what we settled on was that we wanted to work on developing a set of threshold competencies that merit you the right to use the title. That's it. So it's not a designation, it's not a credential. And, you know, I don't know where we're going to go with this. My dad was a dentist as my grandfather and my father were both dentists in Pennsylvania. But when my grandfather, when he graduated from dental school, it wasn't licensed. Wow.  

 But when my father graduated from dental school, it was and that's what happened over 30 years between the two of them. So when my father went to be a dentist, he had to go to dentist school. He had to get a degree, he had to sit for the dental boards. And then he was licensed by the state. And he had a wonderful 45-year career as a dentist. Most professions in this country at that level are licensed at the state level. The complication here is that, as you well know, unlike a lot of attorneys or dentists or physicians, financial planners have clients across multiple jurisdictions, multiple states. So how do you address that? We don't know.  

What we decided, though, was we thought we were going to spend the next 9 or 10 months on this listening tour, listening to our members, listening to constituents in the ecosystem, many of whom will be listening to me this morning. And we're not coming into this with any predisposed conditions. We're not walking into it with a plan already baked. We're actively listening. And after we're done later on this year, we're going to distill all this input and feedback, and then we're going to develop what we believe those threshold standards should be, and then we're going to socialize it again. And after that, then we'll determine what the legislative agenda might be, what path we take. It could be federal, it could be state, it could be regulatory. It's too soon for us to get there. Right now we're just listening to the input and we're getting quite a lot of input. It all started from the precept that how do we protect the title of financial planner?  

 Ric Edelman: So you're basically taking the attitude that, you know, very few people can call themselves a lawyer. It's not even enough that you get a law degree and get a J.D. You have to pass the bar in order to be able to say, I'm a lawyer. And at the moment, that doesn't exist in the financial planning world and you're trying to rectify that. And I'm going to find it really fascinating to see how you evolve in this effort, because if I were to use law as an analogy, if you're going to protect the title, then it would seem that there needs to be a criteria on which you obtain rights to use that title, and that would seem to be an educational standard or a licensing standard, an examination of some point of some type. And so it raises the question, doesn't that already exist by virtue of the CFP designation, the Certified Financial Planner designation, does that not already solve the problem? In other words, say if you want to call yourself a financial planner, you've got to get the CFP designation? Is that a path you think is the way to go, or is this separate and distinct?  

 Patrick Mahoney: It's separate and distinct. As you know, there's planners out there that are not CFPs. And if we insisted on any particular designation, you selected one, there are others we would alienate people that don't have them. So what we're trying to do is take a more 30,000-foot objective assessment of how we proceed with that, what we assess the landscape to be. But we're not focusing on a trademark. We're not focusing on a credential, nor are we focusing on any type of designation. That's not what we're about. We have no interest in that. It's not going to happen from us. So what we are focused on is very important distinction to make. Ric What we are focused on is what the threshold standards should be to merit you. The right to use the title, nothing more, nothing less.  

What should investors know about financial planning credentials? 

Ric Edelman: There are 20,000 plus financial planners, members of the Financial Planning Association. This is a large organization with membership in all 50 states and DC. The fact that this controversy or deficiency exists within our profession is obviously well known. But I don't think it's well known among consumers. And I believe that the investors and consumers who are listening to this conversation right now are going to be a little bit surprised to discover that anybody can call themselves a financial planner. Those who are at the very pinnacle of their profession versus those who are, frankly, charlatans, who are using the phrase financial planner in an effort to separate you from your money in devious ways. So what's your message for consumers recognizing that this situation exists, that there are no federal or state standards for who can hold themselves out as a financial planner? And as a result, it's got a co-mingled jumble, some very legitimate skilled and trustworthy individuals or indeed financial planners and others who aren't are also calling themselves that. What's your message for consumers? How can they protect themselves and help themselves make sure that the person they're hiring is, in fact, who they hope them to be?  

 Patrick Mahoney: I'd answer that in two ways. When you think about from the perspective of the consumer, when Cerulli Associates had this study that was out maybe last April or May, and I think it was like an $89 trillion of a transfer of wealth from one generation to another. You're probably aware of that survey and there have been others like that in a similar range. When you take that and then you look across American households in this country and you look at, you know, you to your children or your parents to you, when we talk about American households at the kitchen table, having those kinds of conversations, both sides of that table need a financial planner. One to give it, one to transfer the wealth and one to receive it. And the indications and the things to think about and the considerations to make on both sides of that discussion. Both sides of that table have a right, I believe, a right and believes a right to crystal clear, consensus driven, data driven, honest, high integrity, financial planning by a person who's in the arena for you, not for them. For you. That's your expectation. And if we do that right, all of a sudden that has two derivative effects.  

The first is the benefit to the financial planners themselves. They begin to sense that they have a chance to be something, to be part of something bigger than themselves, a true profession, a profession that's helping American families in their local communities. The consumers, at the same time, they have the benefit of knowing they're getting competent financial guidance by someone who cares about them, who understands them. The planners in your office with a box of tissues that you're talking about, they get someone that comes in with a disabled child. They get someone that comes in with a parent with Alzheimer's. They get someone who comes in who's in a divorce. They get someone who comes in who's very ill. These people are sensitive, Ric and hurt and worried and anxious. Some are confident, quite proud of the wealth that they've built. And they want to build a lasting legacy for the generations that survived them. And this is a huge responsibility on the person that they're trusting to help them figure that out. That person, that financial planner, has a high degree of obligation and competency that they have to deliver to those clients. And that's the benefit to the consumer that they have someone who's in the arena for them.  

Now, how do we do that? Well, we define and we develop threshold standards of competencies that merit your right to use the title so that when you tell someone, yes, I'm a financial planner, this is what that means, this is what I'm going to do for you. So the consumer benefits from the perspective that they have someone in the arena for them that's honest, for them, that has their best interests at heart, not necessarily what they're being sold. And the financial planner has the benefit of being finally being able to be part of something bigger than themselves, part of the profession that's respected in this country. And when you look at that Cerulli report and you look at $89 trillion that's going from one generation to another, that's a massive responsibility for the nation, for the nation itself. And we are fundamental part of that. So just like their doctors and their attorneys and their accountants and their spiritual advisors, you need you need a team. And part of that team has to be a financial planner. And that's the benefit to the consumer. But it's also a good benefit for the financial planners themselves.  

 Ric Edelman: But how do you, as a consumer confirm that your advisor is in fact that financial planner that you are hoping them to be, as opposed to someone who's simply using the title in order to win business?  

 Patrick Mahoney: So we need to determine once we finish this listening tour that we're doing and we're distilling all this data and coming to grips with what we think those threshold standards will be, then at that point, we're going to make a decision on how best to go about doing that. It could be the estate; it could be at the federal level and it could be at the regulatory level. But honestly, we just don't know. This is a problem that has bedeviled this profession. You know, you've been it longer than me that's bedeviled this profession for decades. But just because something's hard to do. Doesn't mean it's not the right thing to do. And we believe it's the right thing to do. And we're not walking into this with rose colored glasses thinking it's an easy walk in the park to get it done. Far from it. It's going to take several years. But we believe it's important enough to the sanctity of the nation. We believe it's important for the financial well-being of Americans. We believe it's important for the financial sanctity of families. And we believe it's important for the endurance of this profession that you and I both love financial planning.  

 Ric Edelman: You mentioned that you're on a listening tour to figure all this out. Who is it you're listening to, or are they exclusively FPA members?  

Patrick Mahoney: No, right now we just started this in January, so we have 19,000 people to listen to. We have 80 chapters across the country. So the first half of the year we're doing open forums with open members and then we're doing regional meetings. You know, we have 80 chapters, so we do we're clustering them and by state by time zone to talk with as many people as we can. And then we move to the various constituencies in this ecosystem, including the regulators, including certification bodies. We'll be talking with the CFP board. There's no one that we're not talking to when we're done, when we finish this. People will honestly be able to say that they listened to everybody. They didn't necessarily get a vote, but they definitely had a voice. And that's our intention. We didn't want to do and I have to give credit to the board for this. They didn't want to dictate in advance what the solution was because that doesn't go anywhere. You know, if people don't like being told what to do, people like to have input onto what things ought to be. Now, we might arrive at conclusions that some may think. Some will applaud us for doing and others will be dismissive of it and some will be outright opposed. But that's life in America, and that's just the way it goes. But we felt and we believe it's very important that we consult with as many people as possible while we cast a wide net, take our time, and by the end of this year into next year, we'll begin to distill that information. Then we'll come out with a plan and I'll be back on the show.   

Ric Edelman: And I will look forward to hearing that because as you noted, we deal with tens of trillions of dollars of investor assets. Two thirds of all the money that America owns is managed with the aid of a financial advisor. And most consumers don't try to do this on their own. And it's vital that they recognize the quality and the breadth of services that they are getting from their advisor and that they are, in fact dealing with an advisor who's serving their best interests. And if there isn't a federal or state standard at the moment as to who can hold themselves out as a financial planner, it means it's a treacherous environment. I routinely get emails from my listeners of this podcast asking me financial questions and seeking financial help, and the questions that I often get are downright scary because they're saying so and so recommended such and such to me. And it is so blatantly an inappropriate recommendation that is serving the interest of the guy selling it, not the client who is considering buying it, that it is a dangerous situation, especially when you consider that there are tens of thousands of advisors who are doing it the right way, who are trying hard, as you pointed out, who consider this a calling to support and aid members of the local community in the right way.  

Ric Edelman: So I wish you well, Patrick, in your effort to figure this out and to arrive at a place where it's a level playing field where everybody acknowledges who is engaged and who isn't. The criteria for which they can participate, We're not there yet. As you noted, this has been a multi-decade conversation. I hope you do figure it out over the next year. And for the moment, the real message I would say, for consumers is caveat emptor. You need to evaluate very carefully who it is you're taking advice from to confirm that they are, in fact, a fiduciary serving your best interest as a bona fide financial planner. And if you are a financial planner, you've got to work doubly hard to make sure you express to your clients what makes you different from others who might be claiming to also be planners. And until we get this resolved by you, Patrick, and your board at the Financial Planning Association, I think that's all that we can hope for at the moment.  

Patrick Mahoney: Well, it's not just up to I think it's going to be up to all of us, all the players in this ecosystem, Ric that you know very, very well. But we decided that we have a leadership role in this industry, as you know, And we decided that it was it was our right, our opportunity to lead on this, to represent not just our planners, all of whom work very hard and the fabric of the economy of this country, this wonderful country that we're privileged to live in, but also for the benefit of our consumers. And at the end of the day, what's guiding us is what's best for the profession, what's best for the financial planner profession. That's our North Star. And we believe that when we're done with this process, which is going to take a while, it's a big commitment from. But we believe when we get to the end of this journey, we'll all be in a better place.  

Ric Edelman: Well, we look forward to hearing how it progresses. If you are interested in learning more about the services that the Financial Planning Association does. Patrick Mahoney, CEO of the Financial Planning Association, thanks for joining us on the show.  

Patrick Mahoney: Thank you, sir. 

Listen To Your Liver! 

How to get your body, mind and spirit ready for Spring 

Jean Edelman: Great to be with you this week. Finally, we're seeing a little shift in the weather. This is the time that we know as spring. It means we renew and new beginnings and we talk about spring cleaning and opening the windows, decluttering, cleaning out, freshening up in traditional Chinese medicine. And if you remember, I've spoken about this in the past that each season has organs that are related to it.  

And so this time of year is our time of liver and gallbladder. This is when they're most active. As we clean our homes, we also tend to detox and clean our body from the heavy winter. Our heavy winter clothes start changing and our heavy winter foods start changing. You know what? Our liver loves the outdoors. If we find ourselves irritated and easily angered, this is a message that we need to listen to and we need to get outside and give our liver some love. It wants fresh air. It wants movement. We have had our time of sitting and watching movies and being in front of the computer. If we don't listen and love our liver as spring emerges, we will stay agitated and unhappy. And I don't think we want that. As the air warms and we have longer days, it's time for outside activity.   

 Another aspect of the spring is changing how we eat. It's time for lighter, fresher greens, light salads, wonderful fresh fruit, no more heavy stews and comfort food. It's time to lighten it up. Remember to chew our food and we want to stop eating by 7:00 pm so we have time to digest our food and have good sleep.  

So the action item for this week is make a list. What needs to be decluttered, cleared and cleaned? Set a time in our schedule to tackle it. Think about how we can change our meals. Start noticing all the new vegetables and fruits that are coming out and change up our menus a little bit. The spring and summer are so wonderful because the colors are wonderful. If we eat a beautiful, colorful plate, we will feel healthy and be happy and be in more balance. Think of the flowers blooming and stretching into the sun. This is what our body needs. We want to love our liver and give it movement and breath and flexibility. Stretch and try to put some stretching and movement into our morning routine.  

You know what? Our eyes are very connected to our liver because our liver meridian actually opens up in our eyes. And we want good eye function. So remember to take breaks when we're sitting at the computer for too long. We can do some eye exercises or you can actually put your hands over your eyes and let them rest. You'll be surprised how good it feels.   

 What’s next? We want to be outside. We want to be out walking. We want to notice all the beautiful flowers that are coming up, the crocus and the daffodils. It is time of upward energy. It is spring. The sun is out. Nature is coming back to life. And as in nature, it's the same for our bodies. So get outside and get some fresh air.  

So my word for the week is SPRING.  

The S is for our Senses. We want to wake up our senses. And we do this with a color, movement, breath, cooking wonderful fresh foods and being in nature.  

The P is for Prepare. Maybe we're prepping our garden. Or maybe we're taking time to plan ahead some vacation, some nice new meals.  

The R is to Revitalize, to bring fresh energy and oxygen into our bodies. Soak in that sun.  

The I for Infinite. The beauty of the spring and the infinite colors and scents and sounds and the birds. It's just wonderful. The crickets, everything. It's just wonderful as nature comes back to life.  

 And then the N is for Nature. When we follow nature's lead, when we stay healthy and in balance, that is for a good life.  

 And the G is Giddy because we love to smile and laugh and be outside and barbecues and grilling and just enjoying the warm weather and the sun.  

So appreciate that life is coming back from this dormant winter. And embrace all the colors that spring has to offer. Have a wonderful week, everyone.