You know that sinking feeling you get when you realise you've arrived at work without your trousers on? It's not as bad as finding out your financial adviser has disappeared and no-one knows quite where the money is.
The trouser situation is momentarily difficult but rarely serious - most cases turn out to be just a dream. Unfortunately the financial adviser situation doesn't usually end well.
For the 900-odd clients of Wellington adviser David Ross and associated entities the stomach churning looks like it could continue for some time. It appears they collectively had about $430 million invested with Ross's companies, which is a large sum to be handled by such a small outfit.
Those numbers, revealed in a court ruling freezing assets and appointing receivers to Ross' companies, imply a clientele at the wealthier end of the scale with an average balance of close to $500,000 each.
How real the numbers are remains to be seen - the Financial Markets Authority has said it received complaints from 27 people who claim they had not been paid out by Ross as requested. Most of us would probably think a possible reason for the lack of payments was a lack of money.
We mustn't jump to conclusions of course so let's bear in mind there could be a relatively minor administrative problem.
However, I think many investors will be prompted to adopt the brace position. After all, tales of nasty outcomes have been in the news lately. For example, we had flamboyant London trader Nicholas Levene sentenced last week to 13 years in jail for swindling investors out of more than £13m.
It seems Levene persuaded clients he was a gifted trader who could provide them with access to share offers unavailable to ordinary investors. In reality he was running a classic Ponzi scheme, using money from new investors to pay profits to existing clients while funding a lavish lifestyle and a huge gambling habit. His victims included wealthy, business-savvy people such as Sir Brian Souter and his sister, Ann Gloag, who made a fortune from their bus company, Stagecoach.
The illusion was uncovered after Souter and Gloag had to sue him for money due from their portfolios.
We had Kiwi David Hobbs, who will find out next month his penalty for masterminding a A$30m unregistered investment scheme in Australia with "ample evidence" of improper payments, including Ponzi-type payments.
Unlike Levene, Hobbs targeted unsophisticated investors and his penalty will be civil rather than criminal, after Australia's Supreme Court ruled in favour of a lawsuit by the Australian Securities & Investments Commission.
And we had Auckland woman Jacqui Bradley, who ran a financial advisory firm with her late husband, jailed last month for seven years for her role in running a Ponzi scheme that collapsed in 2009 owing investors $15.5m.
It's enough to make you lose faith in your fellow man.
So is there any way for investors to minimise their exposure to mavericks like Bradley, or Hobbs, or Levene? (We'll suspend judgment on Ross for the moment.)
My personal observation is that many of these situations arise because investors place a great deal of trust in a single individual or a small firm. The appeal is often that the person offers something special, something you can't get from mainstream firms or off-the-shelf financial products.
The allure of being in the know and joining a select group with access to superior returns is powerful - and one thing financial advisers of all stripes prize in common is the ability to build relationships with clients.
However, what they don't have in common is a robust back office. In firms where one person controls where the money goes, it's a good idea to have client funds held by a third party custodian - that is, not a related party - who holds the assets on trust. This ensures client funds don't get mixed up with the adviser's own. A custodian is no guarantee that something can't go wrong, but it is helpful protection.
Firms registered as NZX market participants are required to comply with explicit rules on handling client funds, which provides an extra level of safeguard.
More than paperwork, though, the investment process itself should be clear. It's unfortunate that most of us know so little about how investment markets work, because a little knowledge makes it easier to distinguish between genuine investment strategies, utter nonsense, and the stuff in between.
In my view, anyone offering investments beyond the plain vanilla should be trusted with only a portion of your hard-earned cash. Souter, for example, may have been taken in by a charlatan, but he reportedly invested £5m with Levene - a fraction of his overall wealth.
We don't know yet what the issues are with Ross, an Authorised Financial Adviser, but it is apparent his style was not mainstream, with portfolios weighted to mining and resource stocks in Australia and Canada, and biotechnology companies in the US.
To me, that is not a vanilla strategy and represents high risk - that is, it comes with potential for significant losses as well as significant gains. I would therefore think it unwise to place all my eggs in that particular basket.
Whether Ross' clients all had similar portfolios is not clear, but it does appear some people had the majority of their investable wealth in his hands.
While there will always be a place for small operators with an individual investment approach, I am surprised so many relatively wealthy people choose to trust all their money to tiny advisory firms or one-man bands, when they can have their pick of the big names.
Big advisory firms make serious cock-ups too, sure, but they are not usually terminal - which makes for a better night's sleep, even with dreams of trousers.
Ross Asset Management client Bruce Tichbon is inviting others to form a user group. His email is firstname.lastname@example.org. Tim Hunter is deputy editor of the Fairfax Business Bureau.
- Sunday Star Times