Many hard-working professionals in the investment business are now being unfairly scrutinized by investors in the wake of the world’s greatest heist last month. 

Over the last several months numerous well-heeled investment advisors have either committed suicide or have been arrested.

Since December alone, three prominent advisors have committed suicide, including Germany’s billionaire investor, Adolf Merckle, who lunged ahead of an oncoming train on Tuesday after his empire crumbled in the wake of bad bets in the market in 2008. Merckle was a respectable businessman and in no way a fraudster.   

A secular bear market such as this one has the power to unleash all the filth from the financial system, including the biggest investment scam of all-time – Bernie Madoff’s massive $50 billion dollar lie. Yet the others who claimed their lives recently were not part of any scam.

Instead, they were victims of bad investment decisions that caused massive losses to their investors, including one of Bernie Madoff’s investors who killed himself just before Christmas in New York City after learning that his $1.5 billion dollar company had evaporated under Madoff.

Over the last 12 months over $30 trillion dollars’ worth of assets have been wiped-out by the bear market. The deflation now underway has been formidable, destroying financial empires, investors’ dreams and causing all sorts of economic hardship. Though we don’t like to compare this bear market to the Dirty Thirties there’s no doubt that this is the Grand Daddy of bear markets with virtually all asset classes devastated since late 2007.  

Unfortunately, the Bernie Madoff scandal has turned many investors away from entrusting their assets to legitimate and hardworking investment advisors, including hedge funds, mutual funds and financial planners. Suddenly, investors need to know if they’re advisor is “real” and if their assets are truly safe in an environment of growing distrust.

The majority of investment advisors are credible, hardworking individuals and don’t deserve the fallout now underway as a result of the Madoff scam. These professionals have spent their lives working hard to build client relationships and trust; now some investors are turning away because of the widespread fear ingested by massive capital losses and the massive Madoff Ponzi scheme.

A good financial advisor is more than someone you can turn to for professional asset management and consulting; he or she is also a friend, someone you can trust to discuss your financial planning goals and, in many cases, becomes a part of the family. Numerous advisors have successfully served their clients for generations and will continue to do so in the future despite all the nervousness and hype surrounding Madoff.

As a rule, my advice is to never entrust all of your assets to one advisor. It doesn’t matter how great the performance, endearing trust or the long-term relationship fostered. I’ve always told my prospective clients that they should never give me all of their money to manage because they should diversify their risk, asset allocation and manager skills. It’s a rare admission in this business to turn away money but it’s the right thing to do.

Regrettably, many Madoff investors lost their entire fortunes because of greed and poor financial planning. They forgot or dismissed the number one rule in investment management: diversification of assets, including diversification of financial advisors.

There’s certainly no guarantee in this business. Yet the best defense remains diversifying your nest egg across several advisors or money managers to protect yourself from capital losses. Also, make sure you truly understand the investment objective of that product before you commit capital to a mutual fund, hedge fund or any other investment vehicle. Read the prospectus, ask questions and, if necessary, make inquiries about referrals and never let one advisor manage all of your money.