From shady snake oil salesmen to the proverbial Nigerian prince, there is no shortage of fraudsters in the world trying to swindle people out of their money. You might think scams only happen to other people. You know better than to fall for phishing scams or multi-layered marketing products that don’t work. But despite best efforts even the most careful, conservative investors can still get tricked.
A retired couple in Ontario Canada sold their home and received $268,000 from the proceeds. They wanted to invest in something short term and gave the entire amount to an investment company, MJF Financial Consultants. The couple was very explicit that they will need this money in the near future and did not want to risk losing any of the principle. The company told them to not worry.
Well unfortunately the money-grubbing clod of a salesman forged the couple’s signature, and gambled their $268,000 in risky stocks. When the couple asked for the money back, the investment firm had lost $80,000 of their money.
“We had trusted him to make the right choices for us.” – Don, the husband.
A government investigation has found the company committed forgery and acted inappropriately, and it should reimburse the $80,000 back to the couple. However, this recommendation is non-binding, meaning the company doesn’t have to if they don’t want to. Welcome to Canada, where punishment for white collar crime is often just a slap on the wrist 😛 Unfortunately the couple may never see their $80,000 ever again 🙁
“I never had any health problems prior to this. I am now on two heart meds, five times a day. I am furious.” – Elaine, the wife.
Being the victim of fraud and misrepresentation is often harder to avoid. There’s no way to tell for certain which mutual fund dealer will decide to fake a client’s signature, or commit embezzlement or other financial crimes.
So my suggestion to protect your money from conniving fraudsters in the financial industry is to become a do-it-yourself investor. It’s the only way to be in complete control of your finances. Thankfully it’s now easier than ever to start investing by yourself. TD customers can start with some e-series funds. People who have accounts with other major banks can walk into their branch and open up a trading account. The best investments to start with are index funds which will simply track the overall markets.
But if you aren’t yet ready to venture alone, then before you invest in anything else with your financial advisor or mutual fund expert, you need to consider the following questions 😉
- Is this fund/investment sustainable?
- How much do you trust the salesman/manager to tell you the truth and do the right thing?
- Are there any conflicts of interest that might sway the representative’s message?
- What is the management expense ratio (MER) and other possible costs associated with the product?
If the expert whom you’re buying the investment from cannot answer any of those questions, or if you’re not satisfied with the answers, then think twice about giving them your money 😐
Random Useless Fact:
Pakistan has the 6th largest population in the world and is the 2nd largest producer of chickpeas.