Tips to Stay Protected From Financial Fraud

April 5, 2017

Tips to Stay Protected From Financial Fraud

No one is safe from financial fraud. Investors all over the world fall victim to fraudsters who want to separate them from their hard-earned cash. Unfortunately, fraud happens at an alarming rate in the investment sector. Thankfully, there are ways that you, as an investor, can protect yourself from fraud.

Third-Party Custodian Hire a third-party custodian. Your financial security may depend on it. If a financial advisor suggests that you don’t need a third-party custodian, then you need to distance yourself from that advisor. Keep in mind that hiring a third-party custodian doesn’t make you fool-proof against fraud. However, it does provide some additional security.

Keep Up With Your Account Statements

You would be shocked to learn how many people don’t keep up with their financial account statements on a regular basis. In the past, advisors have taken funds from clients by forging their signatures. This type of fraud isn’t possible when people simply review their account statements regularly.

Don’t Let Advisors Rush You If a financial advisor says that you have to invest right away, you may want to be leery of the investment. No investment is so urgent that you have to make a split-second decision. Only agree to an investment after very careful planning. Fraudsters typically count on high-pressure situations to get people to make bad investments. In general, high pressure usually means scam.

Invest in What You Know One of the most common mistakes that people make is investing in industries that they don’t fully understand. This opens you up to fraud because you have to be completely reliant on what your financial advisor tells you to do. If you don’t understand a certain investment, don’t invest in it. It seems simple, but many people all over the world don’t follow this guideline because they’re told that they’re making a good investment.

Stay on Top of Your Money Lastly, stay on top of where your money is and what it’s invested in. Many people simply give their financial advisors large amounts of money and let them invest it wherever they see fit.

Although it’s great to have an advisor that you can trust, it’s better practice to know where your money is.

Investing is an important part of building financial and family security. Using the tips discussed above, you can protect your family from fraudsters while investing to build a nest egg. Even though financial fraud can never completely be prevented, these tips can help reduce the chances of it happening to you.

David Milberg is an experienced credit analyst in NYC. He is a long-time owner of Milberg Factors, a factoring and finance company with locations in New York, California, and North Carolina.