THE disappearance of Kowloon-based financial adviser Anthony Farr with more than $1 million in client funds has highlighted the need for investors to be cautious. No matter how plausible financial consultants may seem, experts say that it always pays to check their credentials. Mr Farr, who ran Cornerstone International Financial Services, allegedly forged investment documents after clients made cheques payable to him. Hong Kong's regulatory bodies cover all types of financial professionals, whether they arrange securities, insurance plans, derivatives or leveraged foreign exchange deals for clients. Although the regulators can discipline rule-breakers, they cannot prevent advisers from behaving unlawfully. Investors must take their own measures to ensure their money does not get into the wrong hands. One financial adviser said clients should always make cheques payable to the insurance or investment company concerned. He said: 'The principal thing is not to make cheques payable to the adviser.' In some cases, such as when an investor sets up a discretionary portfolio management service, money might have to be paid directly to the adviser, he said. But the money should be kept separate from the adviser's assets by being placed in a client account. A financial adviser will typically use a separate investment management company as custodian, which will move money between funds on the adviser's instructions. When arranging an insurance or investment plan through an intermediary, clients should always keep a copy of the application form as a record of the plan they have signed up for and the amount paid. Towry Law consultant Paula King said clients should never leave boxes blank on the application form and should not sign the form if they had queries which could not be straightened out in the meeting with their adviser. Kate Baskerville, marketing manager of Clerical Medical International, said: 'Clients should check their policy documents very carefully, especially the term. 'They should always contact the insurance company direct with queries.' For example, a one-off payment altered to an annual payment could increase the adviser's commission sixfold. It would also mean that most of the client's initial payments would be lost in charges. Ms King added: 'The reason why a lot of people succeed in fraud is because they seem very honest and trustworthy.' She said that establishing how the firm came by its business and who its other clients were could also give clients clues about the type of adviser they were dealing with. A client list which includes large, well known organisations may be comforting, but it can pay to check if there is a doubt. Insurance brokers and investment advisers are now required to have professional indemnity insurance, which covers legal costs and damages if they are sued by a client. It may be advisable to find out how much insurance cover advisers have, particularly if they are using a discretionary portfolio management service. Lennon Chan, director of Tai Fook Securities, said that clients should check whether the company was authorised before committing. The Securities and Futures Commission (SFC) licences five different types of advisers and dealers and has a telephone hot line for inquiries. The number is 2840 9333. Some investment plans provided by insurance companies fall into a grey area, which is regulated by both the SFC and the Commissioner of Insurance. Since the end of last June, all advisers arranging these types of plans, together with all insurance brokers, have been required to join one of two professional bodies recognised by the Commissioner of Insurance. Wong Hing-wah, chairman of the Professional Insurance Brokers' Association, said: 'Under the Ordinance we are required to make an updated list of members available for public inspection.' The other insurance intermediaries body, the Confederation of Insurance Brokers, has employed the accountancy firm, Wan, Tsoi, Ha, based in Causeway Bay, to answer queries. Mr Farr's company has no connection with the real estate affiliate of British bank Abbey National.