Well-educated professionals with financial experience don't get scammed.
Nearly 2/3 of investment fraud victims are college-educated, self-reliant individuals with higher-than-average incomes and levels of financial literacy.*
Research conducted by FINRA, AARP, and others has illuminated several key differences between investors who become victims of fraud and those who don't. Importantly, victims of financial fraud have more self-confidence in their financial knowledge than non-victims and are more likely to invest in new ideas and own high-risk investments.
Additionally, according to SaveandInvest.org, approximately 70% of known investment fraud victims have purchased investments based on a friend, family member, or colleague's recommendation. That's about twice the percentage of non-victims.
FINRA Foundation president John Gannon is quotes as saying: "Many investment fraud victims are professionals. They're doctors, lawyers, stockbrokers, businessmen. In fact, the typical investment fraud victim is a well-educated male between the ages of 55 and 65."
Robert Cialdini, a psychologist at Arizona State University and an expert on the psychology of persuasion and influence, may be able to shed some light on why well-educated professionals are at higher risk for investment fraud. In the article, he says: "If you think you're invulnerable..., your defenses come down.... So those individuals who have the background and experience, who think they know what constitutes a trick and what doesn't, then open themselves up to the possibility of being tricked because they're sure that they can spot it and resist it. Oftentimes they are wrong."
Research shows that conducting thorough research, staying on guard, and carefully monitoring your investments can help protect you from investment fraud.