When is it okay to invest based on a cold-call from a financial advisor? Spoiler alert: never.
A cold-call is an unsolicited phone call from a person selling investments with whom you don’t already have a relationship. Oftentimes, it’s a financial advisor (or someone posing as an advisor) who is touting the next hot stock and wants you to buy it. Typically, the caller presses that the investment or hot stock is an act-now opportunity that will be missed if you wait. Repeated, and more aggressive, calls are common. The investments are often low-priced “penny” stocks, though higher priced stocks and other types of investments may also be pitched. Investors who purchase these investments in response to cold calls often find that the sales pitches are fraudulent and the investments they bought are virtually worthless.
It is very unusual for any legitimate investment opportunity to come to you through an unsolicited investment phone call. I have been representing individuals who have been victims of investment fraud for a long time and my strong recommendation is to never say yes to stock purchases from a cold caller, even if the claims sound reasonable. The best fraud pitches are designed to sound believable, and counter every possible doubt or opposition. Don’t feel guilty about hanging up. Not answering at all, or putting down the phone, are generally the best and safest responses to a cold caller aggressively pitching low-priced stocks or other investment opportunities.
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If you’re looking for quality investment recommendations, you should do research about financial advisors in your area who are willing to meet and develop a relationship with you, before taking their recommendations. Our website has several articles and videos to browse about how and why to do research on your financial advisor before you commit to investing.
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