You’re relying on your nest egg to get you through your retirement. It should be your security blanket, but red flags have left you feeling anything but secure.
One in 10 investors will be the victim of investment fraud at some point in their life. You’ve entrusted your broker with your financial future, but sometimes those you trust deviate from the plan. Remain vigilant when it comes to your investments, and you could dodge the litany of deceptions that exist in when investing.
Red Flags
Some tells are stronger than others, but keeping your eyes open to fraud is often essential:
- Risk tolerance: If your broker didn’t bother to cover the risks you’re looking at with the investments they recommend, that’s probably a good reason to lose confidence. Large swings that wouldn’t be possible in low-risk areas could also be a signal. This could mean they’re putting you in higher risk brackets than you would like.
- Accredited investor: You’re likely looking at a warning sign if your broker says they’re dealing in safe waters, but needs you to fill out certification as an accredited investor. These types of investments can pay big, but they can come with increased risk, illiquidity and higher fees.
- Hurried purchases: Short deadlines on sales might cause you to buy in a panic, so anytime you’re not given proper time to think over investments is a reason to pause. It could mean your broker is trying to hide something or pressure you into a deal you wouldn’t otherwise approve.
- Poor communication: It can be a cause for alarm when your broker is too busy for your calls, is never in the office or your statements stop showing up. Aside from being locked-out, also look for transactions that don’t match what you’ve discussed, balances that don’t add up and overly-complicated investment outlines.
- Too good to be true: When things are going too well might be the hardest time to question your broker. But if your accounts are shooting for the moon, your representative may not actually be acting in your best interest. Excessive risk or outright fabrications could cause everything to look rosy until it comes crashing down.
Spotting trouble before it gets out of hand could make all the difference in protecting your investments. Stay alert, and don’t be afraid to question what your financial representative is doing with your money.
