One MAJOR risk of dealing with a professional services provider is dishonesty. Here is an interesting story about how professional dishonesty can permeate even large, seemingly top tier organizations.
Here’s a great quote from the article:
The Securities and Exchange Commission said Tuesday that a “significant number” of the accounting firm’s auditors cheated on the ethics portion of the Certified Public Accountant test and other courses needed to maintain the licenses. Perhaps more stunningly, the SEC said that Ernst & Young “made a submission” that it didn’t have “current issues with cheating when, in fact, the firm had been informed of potential cheating on a CPA ethics exam.”
The $100 million fine is its largest ever against an auditing firm.
Not only did Ernst & Young have a cheating problem, but they lied about it.
And one final quote from the article:
The fine is double the one KPMG was ordered to pay in 2019 for similar allegations of cheating.
Ooooph! Two of the Big Four accounting firms cheating on the ethics portion of the CPA exam. Not a great look!
Unfortunately, professional dishonesty is not the exclusive realm of large CPA firms. Professions such as doctors, lawyers, engineers, accountants, and especially financial advisors have all demonstrated time and again that they are willing to engage in dishonest practices.
So what can you do about it? As Ronald Reagan said in the context of nuclear disarmament, “trust, but verify.” Anytime you plan to plan to engage a professional, be sure to ask questions. And this doesn’t take much work. Before your first meeting, go on the internet and search for “good questions to ask new [fill in the blank].” Print out the list and take it with you to the appointment.
For example, if you are shopping for a financial advisor, then consider using Jason Zweig’s list of questions (you can find our answers here). Or check the advisor’s website to see if they have an FAQ section.
Take it as a good sign if your chosen professional is willing to answer your questions in a straightforward way (and is willing to provide the answers in writing). If not, then stay vigilant and don’t be afraid to continue shopping around.
