Have you, or someone you care about, been trapped by a financial predator? Don’t beat yourself up too much — you’re far from alone. Financial scams don’t just target the most vulnerable or gullible among us. The best con artists are the ones who know exactly what they’re doing, whether it’s a debt collection, credit card phishing, or imposter scam.
According to the Financial Industry Regulatory Authority (FINRA), approximately one in ten adults in the United States fall victim to fraud each year, losing billions of dollars in the process. However, only people who report fraud are included in these statistics. There are a lot of folks who do not report such betrayal.
But what happens when a financial advisor scams you? Since you were supposed to trust this person, this particular situation can sting badly.
Having said that, remember there is an escape route before you resign yourself to financial purgatory. Following this blog post, you can break free of a scammy advisor’s clutches and reclaim control over your finances.
We need to identify the red flags that scream “scam!” before we can work on escape strategies. Here are some to keep an eye out for:
As soon as you identify these red flags, you should act immediately. To escape a scammy advisor, follow these steps:
In order to protect yourself from fraud, FINRA highly recommends creating a “fraud file.” The file should include all evidence of the fraud and be kept securely.
At the very least, your file should include a written timeline of events, depending on the nature of the scam. The reason? As a result, it will be easier to remember what happened and the name and contact information of the alleged scammer.
When gathering evidence, here are some tips to keep in mind so you don’t forget anything.
Your next step will be to terminate the relationship with the financial advisor. Regardless of whether they scammed you — ending a relationship with your financial advisor can be uncomfortable. However, it is a necessity.
To make the process as smooth as possible, follow these steps:
Don’t storm out without grabbing your client agreement. This document outlines the terms and procedures of your relationship. Knowing these details upfront will help you avoid nasty surprises from a contract you may be in.
Do not jump ship without a plan. In other words, you’ll have to plan how you’ll manage your finances in the future.
In most cases, you have three options:
We’re not talking about packing sentimental items. Instead, this is about getting your financial ducks in a row.
Be sure to request copies of all your account statements, investment reports, and tax documents. By doing so, you will be able to present your new advisor with a full picture of your financial situation, if you choose to go that direction.
One advantage of hiring a new advisor is that they can handle a lot of paperwork. ACATs are one of the most common forms used to change advisers. They come in two forms: full and partial. This form transfers your assets to the new account.
If you want to fire your advisor, a phone call or an email will suffice. There is a good chance they already know why, but they may ask why. Even though you may be fuming, keep it professional and avoid personal attacks.
As soon as the conversation ends, it’s time to cut ties officially. Under your client agreement, terminate your relationship and request a transfer of your assets to your new advisor.
Of course, if you’re dealing with a scammy advisor, the above might not be so easy. Just remember that there are laws that protect victims of crime, both at the federal and state levels. Get to know your rights so that you can better protect yourself. Consult your state attorney general for more information on crime victim rights and resources. You can also contact your nearest U.S. attorney’s office.
Additionally, if you need to create a paper trail, call your advisor’s customer service department. If you call directly, the firm’s customer service department will likely record your conversation. As a result, you can report any suspicions of wrongdoing to the firm.
Most importantly, there’s no need to continue communicating with the advisor.
A scam can be frustrating and frightening. Your identity, your money, or even your sense of security may have been stolen. Fortunately, you are not alone, and steps can be taken to help you recover, according to the Federal Trade Commission.
For more information about your options for recovering your losses, contact the relevant financial regulatory body and seek legal advice. Along with the aforementioned FTC, the scam should also be reported to the appropriate authorities, such as the:
As a result, others will be protected from falling victim to the same scam in the future.
For more information about your rights and options, consult a reputable financial advisor or lawyer. If you can navigate the legal complexities, you may be able to recover your losses.
Once you’ve escaped the scam’s clutches, you must fortify your defenses against future attacks. To help you, here are some tips:
Sadly, it is unlikely that you will be able to get all your money back. According to most experts, it’s rare to receive anything more than pennies on the dollar. Although you might get something back if you report it, you’ll definitely get nothing if you don’t.
However, a civil lawsuit, arbitration, or mediation may help you recover some of your lost assets. Just remember that civil lawsuits can cost money and take a long time to resolve. Even after you win, it might still be difficult for you to collect your judgment.
In addition, some types of theft may qualify for a tax deduction. There is an explanation of what to do in Internal Revenue Service Publication 547, Casualties, Disasters, and Thefts. The special tax rules that were enacted after the Madoff scandal now apply to Ponzi scheme victims as well.
They often involve deceptive practices employed by individuals or companies pretending to be financial advisors. From Ponzi schemes to misrepresenting investments, they aim to steal your hard-earned money.
There are many types of financial advisor scams, including:
The following red flags should be looked for:
You should consider the following when protecting your money:
Image Credit: Leeloo The First: Pexels
The post Trapped by a Financial Predator: Escaping the Clutches of a Scam Advisor appeared first on Due.
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