Beware Financial Scams
Posted on September 28, 2010 by bob in ElderJust, Financial
by Joseph A. Borg, Director, Alabama Securities Commission
To Alabamians, aged 50 and older, the impact of the continuing economic crisis can be measured in how drastically their retirement assets—their “nest eggs”—have been diminished. Many have discovered that their life savings have lost so much value that they can no longer assume a comfortable, well-funded retirement and question exactly how much money will be enough to fund their retirement needs without outliving their assets. These concerns can make our state’s retirees prime targets for financial fraud and investment scams.
The Alabama Securities Commission (ASC) regulates the securities industry in Alabama for main street investors, and one of its top priorities is providing free financial and fraud prevention education to Alabama seniors to help them make informed investment decisions and protect themselves from financial fraud.
The financial crisis has caused many seniors to dip into their retirement savings just to make ends meet. They may feel compelled to explore speculative investment ‘opportunities’ to make up for the shortfalls in their retirement plans. Doing so without the benefit of the right knowledge about these so-called can’t-miss opportunities, and who promotes them, could compromise retirees’ long-term financial stability.
The admonition, ‘if it sounds too good to be true, it probably is,’ is truer today than ever before. There’s danger any time investments are offered based on promises or guarantees of unrealistically large returns over a short time with little or no effort on the investor’s part.
Financial crimes often involve seniors who drop their guard and become too trusting, don’t have someone to counsel them, and who fail to ask the tough, probing questions before turning over their hard-earned money. Perhaps the most important question our seniors should ask is how suitable a potential opportunity will be in helping to meet their long-term financial needs. Suitable investments address specific circumstances based on a person’s accumulated assets, income stream, investment goals, financial liabilities and tolerance for risk. If a senior investor can’t clearly determine how a particular investment can strengthen their retirement plan, they shouldn’t buy it!
ASC recommends caution when dealing with people using “senior specialist” designations which may be a misleading label that does not correctly represent the qualifications of a salesperson or financial professional. Citizens should check with ASC to inquire about a financial professional’s background and to determine whether they are registered with the ASC to conduct securities business within, into or from Alabama and to check if the financial product being offered is licensed, as required by law. The best time to call ASC is before you invest your money!
If you have questions, concerns or complaints about financial products, contact the Alabama Securities Commission at www.asc.alabama.gov, or call toll-free 1-800-222-1253.
