A recent study commissioned by the AARP has revealed that the most common
victims of investment fraud may not be the people we first imagine. When
we think of investment fraud, we often picture a slick con man sweet-talking
our grandmothers out of their dwindling financial resources. But, while
senior citizens are
the prime targets of scam artists, they aren't the most common victims.
According to recently released AARP Foundation National Fraud Victim Survey,
the most common victim of investment fraud is a middle-aged, college-educated
man making an annual income of at least $50,000.
Victims of investment fraud share a few other interesting characteristics,
as well, including a higher-than-average exposure to sales situations
and a higher-than-average interest in pitches promising large returns
fast. They're also twice as likely as the general population to attend
an investment sales presentation in exchange for a free meal or a free
night's stay. (To learn why there's no such thing as a "free
Eagerness to increase their nest eggs in the decade before retirement may
be one major reason middle-aged men fall for investment schemes that promise
high-yield, low-risk products. Unfortunately, such investment opportunities
simply don't exist.
To protect themselves from investment fraud, investors should be familiar
with and watch out for the persuasive tactics most con artists use to
lure in unsuspecting victims. These include the promise of guaranteed
returns, "international connections," and high-yield, low risk
products. Additional methods of protection include:
- Sleeping on it. If someone pressures you with a "must act now,"
high-pressure tactic, walk away.
- Asking questions. An evasive or vague answer should be a warning sign that
something isn't right.
- Investigating. Don't take someone's word that they have a good
reputation, are registered with your state securities regulator, or are
pitching a registered product. Contact your states securities regulator
yourself to verify registration status and background.
Knowing the truth about "credentials." Some professional designations,
such as the CRFA (the certified retirement financial adviser), may not
be what they seem. For help figuring out which credentials are worth something
and which are dubious at best, read