Financial Self-Defense
Posted on April 1, 2013 by bob in Financial
As our country’s over-50 population swells, the Alabama Securities Commission (ASC), and other state securities regulators see tragic cases involving senior investors who have been cheated out of their “nest eggs” by deceitful salespeople who use seniors’ uncertainty about their financial futures to promote unsuitable and fraudulent investment opportunities. These “opportunities” often promise to make up for perceived shortfalls in seniors’ retirement plans and frequently promise or guarantee unrealistically high returns over a relatively short time.
The admonition, “If it sounds too good to be true, it probably is,” is more true today that ever before and an investment opportunity with high returns and low risk is very unlikely. If you decide to explore investments as a way to bolster your nest egg, the first line of defense against possible fraud is to act as your own financial watchdog.
A good rule-of-thumb is, if you don’t understand an investment product, don’t buy it! That’s why senior investors should always investigate before they invest. To avoid having your nest egg turned into a goose egg, the ASC recommends these financial self-defense tips:
– Stay in charge of your money. Be skeptical of anyone who urges you to leave everything in his or her hands.
– Don’t become a courtesy victim. Con artists will attempt to exploit your good manners. Be prepared to tell a stranger offering a too-good-to-be-true investment opportunity, “No, I’m not interested.”
– Don’t let a stranger prey on your fears. Con artists will probe to find what’s important to you and will attempt to manipulate your anxieties through high-pressure or persuasive sales pitches.
– Avoid pushy salespeople. No reputable investment professional should pressure you to “act now,” before you do due diligence. If it’s such a good deal today, it will be a good deal later — after you’ve had a chance to check and verify.
– Beware of anyone touting exotic deals. Say “no” to anyone promoting highly-complex investment techniques to achieve unusual success, especially if they can’t fully explain the risks.
– Monitor your investments and ask tough questions. Keep close tabs on how your money is invested. Always ask for regular written performance updates. Never be afraid to ask, “How will this opportunity you’re offering be suitable for my long-term financial needs?”
– Before you part with your hard-earned money, contact the ASC at 1-800-222-1253 to determine if the investment is registered and if the person or firm making the offer is registered, as required by the Alabama Securities Act.
If you have questions, concerns or complaints about financial products, contact the Alabama Securities Commission, www.asc.alabama.gov, or call or e-mail Dan Lord, Education and Public Affairs Manager, 334-353-4858, dan.lord@asc.alabama.gov.
Joseph Borg, Exec. Dir., ASC
Joe Borg is Executive Director of the Alabama Securities Commission. This article is made possible by a generous grant from the Investor Protection Trust, www.investorprotection.org.
