Investment Fraud – A financial advisers tips to avoid becoming a victim

Investment fraud seems to keep increasing all the time and potentially cost unsuspecting victims huge amounts of money every year, running into multi millions of pounds. And here’s another thing, most of us think that it could never happen to us. But could you unwittingly fall prey to the fraudsters.

Here are the common traits that the investment fraudsters are looking for?

The fraudsters are looking for investors who prefer or are interested in unregulated investments, such as gold schemes and property investment schemes, rather than conventional investments, such as stock market listed shares and unit trust type investments. These types of investors are often prepared to take huge risks to achieve their financial goals, so conventional investments are just not exciting enough for them.

Fraudsters are also looking for impulsive investors who make frequent and ill-considered investment decisions. They most certainly don’t want investors who consider their options carefully and take their time.

They are also looking for people who tend to be a little older and are typically looking to achieve higher investment returns. This is perhaps because older people have lived through times where investment returns were higher, when inflation was also higher. They may well be looking for double-digit returns on their investments.

Another typical character trait of a victim of investment fraud is a person who makes changes or trade their investment frequently. The fraudster is looking for someone who often changes their mind and can be easily persuaded.

Self-advised investors are also a favourite of investment fraudsters. These people are especially targeted as they are far less likely to seek advice from a financial adviser, who would steer them away from an investment fraud.

Perhaps unsurprisingly, men are usually more susceptible to investment fraud, as they are usually bigger risk takers. Generally speaking, women tend to me more cautious by nature, preferring to protect what they have already accumulated. That makes them less likely to be caught out by a fraudster.

What should you do, to make sure you don’t become a victim of investment fraud?

  • Always seek advice from an independent financial adviser, who can carry out due diligence on an investment proposal
  • Don’t make investment decisions based on a phone call or a marketing email
  • Register with the Telephone Preference Service (TPS), so eliminate or reduce marketing calls
  • Install call screening to your telephone, so that you avoid even speaking to unwanted marketing callers
  • Never make investment decisions whilst under financial pressure. It’s not what you could make that is important, it’s what you could lose

Action Call – Financial Advice

Of course, the best way to avoid an investment fraud is to talk with your Financial Adviser. They should always be looking out for your best interests.

If you have family members or friends you believe might be susceptible to fraud, please contact us and we can give you our professional opinion on whether it is an investment fraud or if the investment is even suitable for the situation.

If you would like to talk to about financial planning, please get in touch for a no-obligation meeting. Go to our website and contact us via our “Get in touch” form on our home page or Contact Martin Dodd on 01902 742221.

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It is advisable to take advice from a professional financial adviser when making major financial planning decisions.

Check out our other recent articles here

This article has been prepared in good faith and based on Midlands Investment Agency’s understanding of the law and interpretation thereof at the time of creation. The contents should not be regarded as specific advice and we always recommend that specific advice is sort from a qualified professional. No responsibility can be accepted by Martin Dodd or Midlands Investment Agency Ltd., for any loss that may occur by a person acting or refraining from acting on the basis of this article.

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