Compliance November 1, 2022

Adviser CEO Faces Up to 45 Years for Fraud, Keeping Employee 401(k) Contributions

Maddox Group’s Adam Belardino faces up to 45 years in prison for wire fraud and making false statements to the IRS.

Reported by



The CEO of a financial advisory firm pled guilty last week  to charges including embezzling more than $313,000 from clients and using employee contributions to the firm’s 401(k) plan for both personal and company use.

Adam Belardino, who led the New York-based firm The Maddox Group, last week also pled guilty to two counts of wire fraud and one count of making a false statement to the IRS in connection with schemes to defraud clients and failing to pay the employees’ retirement contributions. He faces up to 45 years in prison.

According to the U.S. Attorney’s Office for the Southern District of New York, Belardino started a retirement savings plan on behalf of the Maddox Group employees, effective at the beginning of 2020 and served as the trustee of the plan. He pled guilty to failing to deposit a little over $8,000 into the plan’s trust account that he had withheld from the paychecks of the four Maddox employees other than himself who participated in the plan.  

For more stories like this, sign up for the PLANADVISERdash daily newsletter.

The U.S. Attorney’s office said Belardino instead converted the funds meant for the 401(k) plan for his personal use and for the company’s use. And the charge of making a false statement to the IRS stems from Belardino authorizing the retirement plan administrator to file an IRS form in which he falsely answered that there was no failure to transmit to the plan any participant contributions.

Belardino also pled guilty to embezzling more than $313, 000 from one his clients. According to an unsealed indictment, Belardino had managed the client’s investments at another firm before he founded Maddox in July 2019.  That following month, he convinced the client to liquidate some of her portfolio and transfer the funds to Maddox to invest.  However, the indictment said that instead of investing the client’s money, he used it to pay his company’s operating expenses, including payroll and office rent, personal travel, and personal credit card charges.

The indictment said that the client instructed Belardino to transfer her portfolio at Maddox to another firm; however, despite telling the client and her family members he was liquidating the portfolio and would return the funds shortly, the client never received any funds by wire, and the checks Belardino had deposited were returned due to insufficient funds.

Belardino also pled guilty to obtaining fraudulent life insurance commissions. According to U.S. Attorney’s office, Belardino served as the agent for an unnamed insurance company in connection with an application by another client for a life insurance policy with a face amount of $1 million, which was eventually increased to $18 million.  As an agent, Belardino received commissions from the insurance company once the client’s application was approved.

Belardino also applied for two more life insurance policies on behalf of the client without their knowledge or authorization with a face value of $3 million and $5 million respectively.  While applying for the policies, Belardino lied about the client’s net worth and health, and increased the face amount of one insurance policy to $6 million and the other to $12.1 million again without knowledge or authorization.  He also paid and attempted to pay the policy premiums of $194,280 and $105,000 respectively with the client’s funds, while at the same time receiving nearly $200,000 in commissions.

Belardino, 37, pled guilty to two counts of wire fraud, each of which carries a maximum sentence of 20 years in prison, and one count of making a false statement to the Internal Revenue Service, which carries a maximum sentence of five years in prison.

Data & Research October 31, 2022

The Case for the 60/40 Portfolio’s Survival – In Two Charts

60/40 investing for long-term savers is coming under fire with the recent market downturn and rise in alternative options. Researchers at Leuthold Group break down why 60/40 may still have life in two simple charts.

Reported by




The 60/40 investment rule of thumb has been killed and revived many times over the years.   

Now, with equities (the 60) and fixed income (the 40) both seeing drops in value, that strategy is again being brought into question. There are louder calls for a more tailored mix of weighting in portfolios, including alternative investments such as real estate investment trusts (REITs), or even, due to higher interest rates, old school certificates of deposit (CDs).

Never miss a story — sign up for PLANADVISER newsletters to keep up on the latest retirement plan adviser news.

The investment research firm The Leuthold Group, based in Minneapolis, this October took a deep dive into the asset allocation for both a historic look, as well as considerations for the future. They didn’t come down definitely on the side of 60/40, but they do argue that, for long-term investing, it continues to show its value.

It’s true, Research Director Scott Opsal writes in the report, that “the 60/40 strategy is having a terrible 2022.” The results are clear in first chart below, which shows annual returns of a 60/40 stock and bond mix, with a stark drop in both this year.


Source: The Leuthold Group

Even so, the chart shows that, despite a bad year, the 60/40 strategy has worked pretty well over time.

“Since 1976 there have been nine years when the 60/40 portfolio posted negative returns,” Opsal writes. “Three of those years barely registered negative, and three others stopped short of a 5% overall loss. The only two annual declines of more than 5% came in the depths of severe equity bear markets in 2002 and 2008, and in both cases, bonds delivered positive returns to temper the overall loss.”

Then came this year, when values of both dropped together significantly.

What Next?

The question, then, is how to determine whether this is a blip in an otherwise good strategy, or a turning point. To get an answer, Opsal analyzed the “expected” returns for 60/40 investing over time. He then matched that to the year-by-year performance.

He found that the realized returns on stocks and bonds were “well above expected returns quite often in recent years, as signified by bars that reach higher than the green line.”

Source: The Leuthold Group

Through the research, Opsal estimates that rising valuations “boosted actual annualized returns almost 3% above expected return from the end of the 2002 Tech crash through 2021.” Even with this year’s drop, the excess return over expected returns over the last 20 years is an annualized 1.5%.

Going forward, returns may be even better, according to Opsal. The current falling stock valuations and rising bond yields have lifted estimated returns in a 60/40 mix to 6.9%, which “has greatly improved the attractiveness of 60/40 going forward.”

That said, the firm also notes that stocks and bonds tend to have the same sensitivity to inflation and interest rates, and opposing sensitivity to economic growth and unemployment. In short, “when inflation and interest rates dominate the conversation [today], we should expect a positive sign on correlation,” or more risk for market declines.

If a situation like the current one returns, “investors may be less willing to hold large allocations to equities when they are feeling bearish,” Opsal writes.

Alternative Options

The rise of Target Date Funds (TDFs), an age-based investment that generally allows for more risk when a saver is younger and gets more conservative over time, shows that many people know the 60/40 mix is not a one-size fits all. TDFs have grown in popularity in recent years, particularly among younger 401(k) participants, according to May research from the Investment Company Institute (ICI) and the Employee Benefit Research Institute (EBRI).

Many are also taking advantage of this moment to point out the need for alternative investments in portfolios, and research shows financial advisers are taking note.

Milind Mehere, founder and CEO of New York-based Yieldstreet, a digital wealth platform for alternative investments, says this is the natural evolution of investing.

He argues that institutional investors have already made the move to alternative investment strategies, and now the general public should have access as well.

“What we are really telling our investors is that you have to start modernizing your portfolio away from 60/40,” Mehere says. “Institutional investors are more than 50% locked into alternatives, but retail investors are just 5% invested in them. We need to start moving from 60/40 to 50/30/20 or something along those lines.”

The researchers at The Leuthold Group note in their report that, as with most investment decisions, timing will be everything.

2022 proved that “commentators were rightly skeptical about the strategy’s future prospects,” Opsal writes. “However, having experienced a record correction this year, the 60/40 is once again priced to deliver reasonable expected returns, albeit with more volatility caused by a diminished benefit from diversification.”

«