On April 1st, the Financial Industry Regulatory Authority released an investor alert “to help investors avoid getting fooled.” These tips provide ways to spot potential misconduct and fraud so you can protect your finances. At Meyer Wilson, we want to make sure all investors are aware of the potential dangers of investing and understand the various ways to avoid fraud.
It is extremely important to do your research before making an investment with a broker or firm. You must build a relationship on trust when it comes to someone handling your finances. Before you choose a broker, check to make sure they are registered. You can also check to see if there are any disciplinary actions against the broker or any complaints. You can use FINRA’s BrokerCheck to learn about any violations the broker may have made.
There are various investment products and strategies and some will fit your portfolio more than others. For instance, depending on the amount of money you are investing, you may want to take a safer route and invest in low-risk investments. Broker’s often make recommendations regarding where they feel you should be investing. Sometimes, though, these recommendations are unsuitable for your portfolio and they may be trying to collect more money from commissions and fees.
Keep in mind, it’s your money; you have the right to ask questions. Speak with your broker about what type of investments best suit your goals, objectives, risk tolerance, and financial situation. Don’t be afraid to ask questions or appear uninformed, and if you can’t get satisfactory answers to your questions, then don’t agree to purchase the investment.
Again, this kind of relationship should be built on trust. When working with your advisor, you should be able to trust that they have your best interests in mind. Keep the communication open so you can ask questions or express concerns. This allows you to bring up any issues if you notice discrepancies in your account as well.
Above all else, it is important to know what fraud can look like. Keep an eye open for guarantees, unregistered products, overly consistent returns, complex strategies, missing documentation, and account discrepancies. . Financial advisors guaranteeing certain returns or selling unregistered products may be misrepresenting investments. Always exercise healthy skepticism when considering any investment that’s being sold to you.
If you’ve lost money because of broker misconduct, contact our securities fraud lawyers for a free consultation. We may be able to help you recover your losses.