As Reuters suggests, there has never been a better time to find an investment advisor and start to secure your future. Quite simply, the SandP 500 and the Dow Jones industrial average have never been as healthy as they are now, granting a rare opportunity for Americans to make significant returns.
That being said, the betrayals of Bernie Madoff are still fresh in the minds of many Americans. As U.S. News and Money Report points out, most certified investment advisors want only what’s best for their clients. However, as evidenced by CNBC’s popular “American Greed,” a TV show devoted to exposing corrupt investment professionals, there is still need to be wary when finding an investment advisor. If you feel like it’s time to make an investment but you’re wondering who you can trust, consider these tips for avoiding fraud.
Three Tips for Avoiding Fraud when Using an Investment Advisor
- Don’t Be Passive About Your Investment Advisor Business Plan
- Are Their Promises Realistic?
- Do They “Eat Their Own Cooking?”
According to Investor.gov, your best defense against investment fraud is being engaged in your investment plan. If your investor pitches something to you that sounds shady, do your homework, and suss out whether it’s legal, ethical, and moral for yourself. Remember, criminals act only in their best interest, and they will show no concern for doing anything for you. Do not take a set-it-and-forget-it approach.
If you remember nothing else from this list, make sure you remember this: no investment advisor, regardless of their experience or skill, can guarantee returns — especially not on a consistent basis. Subsequently, as DailyFinance.com suggests, any advisor who promises high returns on a regular basis is likely doing something illegal to guarantee that result. Bernie Madoff’s Ponzi scheme is a case in point.
Just as you’d never trust a politician who doesn’t practice what they preach or a chef who won’t eat their own cooking, so should you never use an investment advisor who doesn’t follow their own financial advise. Warren Buffett, one of the richest men in the world, tends to invest his personal funds along with his clients’, as Forbes writes. If your own advisor doesn’t demonstrate a similar level of confidence, find someone who does to help avoid losing it all.
Meeting with a certified investment advisor can and should be a great experience. Nine-times out of 10, you will meet with someone who works only for your benefit. With these tips, you can ensure you don’t get that one bad apple. Read more here.