Protect Yourself from Investment Fraud

When soliciting financial advice, it is important to be cautious and vigilant. It is essential to not share your personal information such as your social security number and bank account information with anyone you do not trust. Always make sure you are visiting the official website of the financial advisor and not an imposter website. Never send money or data without verifying the recipient beforehand. It is also wise to verify the information with an internet search or even a phone call. If anything seems suspicious or too good to be true, it is probably a red flag of fraud. Always trust your gut and be extra careful when it comes to matters of your finances.

In this quick guide, we will explain the simple ways to protect yourself.

Be wary of sharing personal information, especially your social security number, date of birth and address unless you are certain you are dealing with a legitimate financial advisor or institution.

Quick side note: If someone asks for your password to anything, they are scamming! No legitimate financial professional at any firm or other company will ever need your password. Never share a password with someone you don’t fully trust!

Do not send money or provide sensitive data without verifying the recipient. Before sending money or providing personal information, make sure you are dealing with a legitimate financial advisor or institution by checking their credentials and licensing.

Make sure you are visiting the correct website and not an imposter website. Scammers often create fake websites that look similar to legitimate ones to trick people into providing sensitive information. How can you know if you are on the right website? Double check the URL; the URL of a secure website will start with “https”. If something feels off, you can verify the website with an internet search and even a phone call if necessary. It's always important to verify any information provided to you, such as an advisor's credentials and qualifications.

How can you verify a financial advisor’s credentials?

Choosing an advisor requires your trust. It’s important to make sure your advisor has relevant credentials to help you with your unique financial needs. Below is a list of public databases where you can verify the credential or professional designations for a financial advisor. Unfortunately, there is not one singular database for every credential and designation. However, we provide this list as a resource for people to check the credibility of their advisor.
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Verify your advisor is a CERTIFIED FINANCIAL PLANNER™

To verify the validity of a CERTIFIED FINANCIAL PLANNER™ professional, visit the CFP® Board's website here: cfp.net/verify-a-cfp-professional‍
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Verify your advisor is a Chartered Financial Analyst

The CFA Institute allows you to search by name and location via this Member Directory Search tool.
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Verify your Advisor's Credentials

Using this directory from Your Advisor Guide allows you to verify the credentials and designations listed below:

- Retirement Income Certified Professional – RICP®
- Wealth Management Certified Professional – WICP®
- Chartered Financial Consultant – ChFC®
- Chartered Advisor in Philanthropy – CAP®
- Chartered Special Needs Consultant – ChSNC®
- Chartered Leadership Fellow – CLF®
- Financial Services Certified Professional – FSCP®
- Chartered Advisor in Senior Living – CASL®
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Verify your Accountant's Credentials

To verify the license of a CPA, you can either search by state or use this national directory called CPAVerify.org
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The Institute of Management Accountants provides this free directory to check for the designation, Certified Management Accountant – CMA®
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College for Financial Planning®

Verify the credentials of your advisor using this tool from the College for Financial Planning®; this database from the College can be used to verify the credentials and designations listed below:

- Accredited Asset Management Specialist – AAMS™
- Accredited Wealth Management Advisor – AWMA™
- Chartered Retirement Plans Specialist – CRPS™
- Chartered Mutual Fund Counselor – CMFC™
- Chartered SRI Counselor – CSRIC™
- Chartered Retirement Plan Counselor – CRPC™
- Wealth Management Specialist – WMS™
- Sports and Entertainment Accredited Wealth Management Advisor – SE-AWMA™

‍Red Flags for Fraud

Be aware of red flags of fraud. These include high-pressure sales tactics, promises of guaranteed returns, and unsolicited phone calls or emails.

In summary, be cautious when soliciting financial advice, protect your personal and financial information, verify the authenticity of the website and advisor, and be aware of red flags of fraud. Always be vigilant, and if something seems too good to be true, it probably is.

‍‍Are you on the lookout for a new investment opportunity but not sure how to protect yourself from scammers?

Look out for these warning signs of investment fraud:‍

Guarantees

Anyone who promises you the moon with their investment is a red flag. Remember, all investments come with a degree of risk.

Unregistered products

Be wary of unlicensed individuals trying to sell you unregistered securities. These can range from stocks, bonds, notes, hedge funds, oil or gas deals, or even fictitious instruments like prime bank investments.

Overly consistent returns

If an investment seems too good to be true, it probably is. Watch out for investments that consistently go up month after month or provide steady returns, regardless of market conditions. Legitimate investments can have their ups and downs.

Complex strategies

If an investment professional can't explain their strategy in simple terms, it's best to steer clear. Make sure you fully understand any investment you're considering, including the risks and how it makes money.

Missing documentation

If someone tries to sell you a security without proper documentation, they may be selling unregistered securities. Be sure to ask for a prospectus in the case of a stock or mutual fund and an offering circular in the case of a bond.

Account discrepancies

Keep an eye on your account statements and be sure to know who holds your assets. Unauthorized trades, missing funds, or other issues with your account statements could be a sign of fraud.

A pushy salesperson

A reputable investment professional will never pressure you to make an immediate decision about an investment. If someone is pushing you to act fast, it's best to walk away.

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Investment opportunities can be tempting, but it's crucial to remain vigilant and protect yourself from fraud. If something seems too good to be true, it almost always is. Trust your instincts and be wary of guarantees, unregistered products, overly consistent returns, complex strategies, missing documentation, account discrepancies, and pushy salespeople. Don't be afraid to ask questions and make sure you fully understand any investment before making a decision. It’s also good practice to consult your friends and adult family members. 

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