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5 Ways to Guard against Fraud when Seeking Financial Advice

Fraud is a reality we must constantly guard ourselves against no matter the situation.  Unfortunately many of us want to trust any friendly person we meet.  It’s always important to exercise a reasonable amount of caution.  Here are some steps to help you.

  1. Look beyond the designations on a business card.

There are over 170 known designations and certifications used by financial professionals. Some require rigorous testing. Others are little more than marketing tools, with no real education needed—much less an exam.  Also, don’t just go off an advisor’s word.  Just because they tell you they hold the CFP® or any other designation doesn’t mean they actually do.  Often a list of advisors holding the designation, as well as a list of requirements for obtaining and maintaining the designation, will be available on the internet.  For instance, you can search for me on the website www.cfp.net 

  1. Just because a so-called expert recommends it doesn’t mean it’s right for you.  The same holds true for your buddy or neighbor.

I have repeatedly emphasized that your specific situation and circumstances dictate the best course. An aggressive stock might be what’s needed for a 28-year-old saving for retirement, but that same investment might not work well for someone who is 65 and already retired.

  1. It’s a tried and true axiom. If it sounds too good to be true, it’s probably not legitimate or safe.

It’s human nature to want to find the magic bullet that easily solves a problem. Be very wary of promises that seem too good to be true.  

  1. Don’t confuse familiarity with trust.

We know plenty of good people in our community, but please do your homework and check anyone out before entrusting your finances to them.  Most advisors and their backgrounds can be found by visiting https://brokercheck.finra.org/.

  1. Get the full story.

How does the advisor get paid on this particular investment?  What are the risks involved with this particular investment?  If you’re told there’s no risk or the investment is “free”, go back to Step #3.    

Never hesitate to reach out to us if you’ve come across something you just don’t understand well enough to ask the right questions.  We are here to assist you, your family, and friends in any way we can to help prevent fraud.