Midlife is when we need to start worrying about investment fraud. It’s when we start looking forward to retirement, but at the same time, we’re paying for college tuition and the weddings of our children.
This is also the phase of life when our earning potential may have peaked.
No wonder we’re such targets for investment fraud!
Do you know how to find the safe investments among everything you’re being offered?
Here are some clues that the deal you’re being offered is too good to be true.
For guidance, I checked in with the Securities Division for the State of South Carolina.
I’m based here in South Carolina, but the warning signs this group highlights are universal.
If any of these warning signs pop up in your dealings with an investment professional, you may need to take a closer look.
Don’t just examine the person you’re dealing with, but also take a closer look at the products you’re being shown.
You’re being offered above-average profits.
If the deal you’re being shown promises you interest, returns or payouts that don’t align with industry standards, be wary. Interest rates are pretty standard across the board, so abnormal profits may be the warning sign of a scam.
The deal offers you lots of money in a short amount of time.
Beware of deals that offer payouts in 30, 60 or 90 days. The investment you make may be paying back a previous client, who invested and is now waiting on the big profits they were promised. Don’t be the client who is waiting for an investor who never shows up, just so you can get your money back.
The person you’re dealing with is using high-pressure sales tactics.
Watch out if you’re told “this chance is just now opening up to others”, which is why you have the potential to invest.
If you’re told you’re “getting on the ground floor of something”, take a closer look.
Or you may hear you “need to act soon on this opportunity”, before others find out about the great deal.
Sorry, Friend–these can all be signs of investment fraud.
The person you’re dealing with is asking you to keep the details of the opportunity secret.
If you’re asked not to tell anyone else about this great deal, chances are it’s not a great opportunity.
Most likely, it’s something shady and illegal.
Sadly–this tactic is frequently used on elderly people.
The scammer doesn’t want the older person’s children or caregivers alerted to the fraud, so they manipulate their victim into being quiet about this “special opportunity”.
Meanwhile, they quietly raid the elderly person’s accounts, without any family members becoming aware until it’s too late.
Your profit is based upon your investment level.
Be careful if you’re offered a higher payout for bigger investments.
In other words, if you contribute a bigger chunk of money to invest, they’ll promise you a bigger payout at the end.
This can a way they convince you to invest more money than you had originally planned, to increase their own profits.
There is a significant lack of paperwork.
America is the land of lawyers, so if you’re not offered solid paperwork to show the who, what, when, where and why of the investment–be careful.
Every legitimate business will spell out, very clearly, what the terms of your investment are, to prevent trouble down the line.
If you’re offered slick and attractive sales materials, without a lot of meaty content, you may be running into investment fraud.
There seem to be unrealistic promises for success.
If you hear the words, “no risk”or “guaranteed not to lose money”, be very careful.
Genuine investment advisers always caution you about possible risks with any investment you make.
Diversifying your portfolio prevents you from losing money if something doesn’t work out, and legitimate professionals encourage you to do this.
So if someone promises you’re not going to lose any money with them, they might be lying.
Be careful if you come across impatience, anger or high sales pressure if you question anything about the deal.
If the salesperson you’re dealing with acts offended, angry or anything else when you ask questions, be wary.
A genuine financial professional has spent years studying, and being accredited in these matters. He or she will understand your lack of knowledge, and take whatever time is necessary to make sure you are comfortable with your decisions.
Be careful if you’re trying to figure out the investment opportunity you’re being shown, and the salesperson seems threatened by your inquiries.
It may be there’s not really anything behind their slick presentation, and they’re anxious you’re going to figure that out.
The investment is intangible.
You know the old joke about someone selling you swamp land in Florida, right?
But–what if they do?
If the investment is impossible to get to, unavailable because it’s still in the planning stages, or hard for you to visit–take care.
You’re encouraged to bring others into the scheme.
If a seller is asking you to do their marketing for them, it might be shady.
Asking for referrals is a good business practice, regularly done by professional money managers.
Getting you to bring in other people, so they can also join the investment circle though, is a different thing, altogether.
Make sure you know the difference.
There’s no opportunity for third-party review.
If you’re not allowed to have another person look over the opportunity, it may be investment fraud.
Big decisions take time, so you should have the opportunity to consult with your parents, your spouse, your attorney–anyone you want, about this chance to make money.
If the seller makes you feel guilty or naive for seeking guidance from anyone else, it may be a scam.
Or, if they’re reluctant to have another professional looking over the information they’re providing you, it could be investment fraud.
Your salesperson suddenly seems much more wealthy than they have in the past.
If the financial adviser you’re working with starts showing up with signs of wealth such as fancy cars or jewelry, take note.
If they start talking about vacations, new properties, art collections or other signs of wealth, they may be investing your money in themselves, and not in whatever they say they sold you.
The person or product is not listed with the Securities Division of your state.
If the person or firm you are dealing with is flying under the radar, there’s a reason.
Contact the Securities Division within your state’s Attorney General’s office, to verify the person you’re working with is a legitimate financial professional.
Make sure any products or investments they are offering can be monitored and overseen by this office.
If they’re unknown to the governing bodies in your region, take that as a warning sign.
Investment fraud can ruin lives.
Dishonest money managers, financial planners and investment advisers can ruin a family’s financial stability for generations.
Please hear me well: many men and women in this industry are trustworthy and sincere.
But sadly, many others of them are not.
Make sure you are receiving solid investment advice, and being led to safe investments.
If you have any questions at all, check with your state’s Attorney General.
In case you’ve been a victim of investment fraud, here are resources that may be helpful:
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**Chanler Jeffers has seen many extraordinary things over her lifetime. An adventurer, survivor, overachiever and advocate of kindness in all instances, she has been awarded the Lifetime Achievement Award by the American Chamber of Commerce Executives (ACCE), and is a member of their Circle of Champions. She has had the good fortune to live and travel all over the world, grew up as a military dependent and was a single parent for many years. She has survived cancer, and gently shaped countless people over her years on this little planet we call home. Follow along as she shares her knowledge, her experience and her love. Oh, by the way–one more thing. She’s married to a Bass playing rock star, lucky girl.
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