As time marches on and the generation of baby boomers approaches retirement age,
there has been a big push in the investment community to cater to its needs.
Most professionals have the best of intentions and provide good advice and
planning for this segment of the population.
However, as is usually the
case, there are also many “so-called” professionals pushing all kinds of schemes
that ultimately take advantage of clients and cause them much financial harm.
Fraud happens from time to time, so one needs to work with reputable advisers
and understand investments before risking real money.
Sounds too good
of the first danger signs is a promise of unrealistic returns. For example, a
few years ago, large-print advertisements appeared in the local media offering a
seminar about a financial system that supposedly returned more than 50 percent a
year to its investors. After checking out the company, I found that its logo
featured an old woman reading the finance page and smiling, as if she is having
huge success and making tons of money. This only added to the unethical nature
of this company, which was clearly preying on vulnerable, unsuspecting
Additionally, always be suspicious of promises of
above-normal returns. No investment can guarantee a specific return. Even US
Treasury bonds are theoretically subject to default risk.
It is also
important to steer clear of any mail, whether real or virtual, claiming that you
have won a foreign lottery or informing you that if you send some personal
information and maybe a bank-account number to a person in Nigeria or London,
millions of dollars will be transferred into your account. (I would be a
billionaire now if it was true!) While this warning may sound elementary, I
personally know at least 15 people who thought this was real, and they were
about to send the information. Fortunately, they called me first and a potential
disaster was averted.
It is vitally important to remember that
one should only work with an adviser who is licensed both in Israel and abroad.
This will help to ensure that the client receives the appropriate advice that he
or she needs, as well as providing a legal outlet for any potential
Your adviser also should preferably speak your language and
understand your situation. Regulatory agencies, both in Israel and abroad, have
made it quite easy for individuals to check if their adviser is licensed and in
Unless you have invested in some kind of
private investment vehicle, always request official monthly and/or quarterly
statements from your firm. An investor should be suspicious if these statements
look as if they have been produced manually. For example, I once had a client
who received very sporadic manual statements, and whenever he asked his adviser
how much money his account was worth, he would always get a vague
If you are in a private investment vehicle, this is
understandable because it’s not always so easy to calculate each investor’s
holding. But if you are investing in a regular account and your adviser can’t
tell you what your account is worth, something is going on.
If you are
already retired or approaching retirement, you need to protect your earnings.
After all, you’ve worked hard for your money, and it’s time to let your money
work for you. Chances are that this is what you will have to live on until you
are 120 years old. Be smart, and don’t fall prey to someone who has only his
best interest at heart.
The information contained in this article
reflects the opinion of the author and not necessarily the opinion of Portfolio
Resources Group, Inc., or its affiliates.
Aaron Katsman is a licensed financial professional in Israel and the United
States who helps people with US investment accounts. He is the author of the
book Retirement GPS: How to Navigate Your Way to A Secure Financial Future with