Financial Scams are More Common Than You Think

For Mark Roberts’ Use: Financial scams sound like something that only happen to television characters, or the young and inexperienced. Most of us believe we couldn’t possibly become a victim of a con artist, because we’re generally well educated on financial issues. And besides, these things are super rare, right?

Unfortunately, no, financial scams are not nearly as rare as you might think. In fact, a study by the FINRA Investor Education Foundation found that 84 percent of Americans age 40 and older have been solicited to take part in a fraudulent financial scam at some point during their lives. And sadly, 11 percent of survey respondents said that they had lost money to such a financial scheme. Not only are these scams more common than you believe; a significant number of people have fallen for them.

So how, and why, does this happen? The FINRA study found that the following sales pitches aren’t as obviously fraudulent as you might expect:

“This investment has made hundreds of people extremely wealthy” – 30 percent of survey respondents thought this statement was reasonable
“The lowest return you could possibly get on this investment is 50 percent annually, but most investors are making upwards of 110 percent per year” – 42 percent of people responded favorably to this statement
“There is no way to lose on this investment; it’s fully guaranteed” – 43 percent thought this statement sounded legitimate!

All of these sales pitches have one thing in common: They set forth unreasonable expectations regarding your potential return. Hearing such promises should be a red flag, but retirees who are worried about their future incomes tend to fall for them. It might even be a case of believing what they hope is true, because they’re desperate to boost their retirement savings at this time in their lives.

So, how can you keep a level head when approached about an investment opportunity? Just remember these rules:

If it sounds too good to be true, then it probably isn’t true.
Never provide your bank account information or send money without proof of someone’s legitimacy.
Remember that schemes won’t be obvious; con artists work hard to make everything look legitimate.
Exercise skepticism in every situation.

And if you’re feeling concerned about your retirement savings or income, there are more productive ways to address that anxiety. Remember to meet with us regularly to discuss your concerns, and we can help you identify legitimate opportunities to address your budget concerns.

About the Author: Mark Roberts

In addition to managing clients’ money and giving investment and diversification advice, Mark offers something that “the other guys” don’t - a unique approach to Retirement Tax Strategies and distribution. Time and time again, Mark meets with new clients who tell him they have a great relationship with their financial advisor but have never been offered information on this kind of approach to securing their financial futures. Mark has taken this feedback to heart and works tirelessly to ensure that his strategies focus on taxes and distribution. Mark started selling insurance for a major insurance company right out of high school to help put himself through college. After graduating with a degree in finance, he dove into estate planning on the financial side to set himself apart from other financial advisors. However, as changes were made to estate tax laws over time, Mark shifted his focus to income tax strategies. Mark’s philosophy is “the blue prints are more important than the wall paper or carpet.” The wall paper and carpet represent products like investments and insurance policies, whereas the blue prints represent the strategies. Once strategies that truly fit the client’s needs are put in place, our focus can shift to providing you with the right products. According to Mark, “It doesn’t matter what carpet we use if the walls are not in the right place.” Our approach to money management is designed to generate the largest alpha (quality) with the lowest standard deviation and beta (risk). By doing this, we help provide clients with the highest return on the lowest risk. Generating income for our retirees is also very important. Because withdrawing money from your portfolio hurts the account rather than helping it, our goal is to design income strategies to harm the portfolio the least making the money last longer.

Financial Scams are More Common Than You Think

Financial Scams are More Common Than You Think

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About the Author: Mark Roberts