It’s not what you think. Victims of financial and investments scams tend to be smart, educated, confident and experienced investors and businesspeople.* And the key is confidence and self-reliance. Persons who fall victim tend NOT to seek the advice of others.
In short, it DOES happen to you and me – business owners of sound mind. How do you protect yourself? According to a recent article in the Wall Street Journal titled “Fraud Doesn’t Always Happen to Someone Else”:
Ask question, lots of them. Studies show that victims tend to ask few questions. They tend to mostly listen to the pitch rather than think actively and discerningly, and ask probing questions.
Check credentials. Check facts. Do due diligence.
Seek informed second opinions. If you find yourself wanting to run away from the opportunity to hire a smart and sane advisor for fear he or she will pooh-pooh your ideas, sober up! You’re dangerously close to the precipice!
List the cons first. Listing the pros and cons can facilitate a rational (as opposed to emotional) assessment of the opportunity, but studies show that listing the pros first can hinder one’s ability to fully vet the cons. So do your Ben Franklin, but start with the cons.
To be sure, the scammers are everywhere. Be skeptical. It can and likely WILL happen to you if you are not careful.
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* According to studies by FINRA Foundation, WISE Senior Services of Los Angeles and AARP of Washington state.
