Choosing a registered financial adviser – one step in fraud prevention

by admin on March 20, 2009

in Fraud Prevention, Working with an Adviser

An estimated 72,000 Canadians were victims of investment fraud in 2007.

Atlantic Canadians are more likely than the average Canadian to be approached with a fraudulent investment, according to research conducted by the Canadian Securities Administrators in 2006.  Atlantic Canadians are also much less likely to believe that investment fraud is a problem in their province.

Nova Scotians have a reputation for friendliness and hospitality. Does this put us at increased risk for fraud? Are we simply too trusting? Perhaps there are times when we should worry less about being rude and just close the door, hang up the phone, or delete the email.

Many of us rely heavily on the recommendations of advisers, family and friends when it comes to our investment decisions.  If the people we put our trust in are not acting in our best interest, this can have disastrous consequences for our finances. Who would you prefer handling your future – someone with your best interest in mind, or their own?

The key to avoiding investment fraud is to deal with a registered and reputable adviser. Anyone selling securities (investments) in Nova Scotia is required to be registered with the Nova Scotia Securities Commission (unless they qualify for an exemption, which you can verify by contacting the commission). Firms and individuals can only register with the commission if they are properly qualified.

How do you find YOUR adviser?

Ask for referrals from friends, family or work associates, but never assume that who’s right for them is right for you.  Make a list of potential candidates. Call them, and screen over the telephone. Ask potential advisers for references who you can follow up with.

You can check an adviser’s registration with the Nova Scotia Securities Commission. You can also search our enforcement proceedings online, for any past litigation.  The Better Business Bureau can tell you if they have a history of complaints against an adviser.

Choose an adviser who has the necessary qualifications and experience, who is registered with your local securities regulator and who you believe is trustworthy. Just as important is choosing someone you are comfortable with. Trust your judgment about whether a candidate will listen to and answer your questions.

Don’t be afraid to make a change if it becomes clear your first choice was not the right one or if your needs change. Account transfer fees can often be waived, and in any case are a small price to pay for peace of mind.

This post featured in Carnival of Pecuniary Delights, Edition 21, August 27, 2009.

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{ 1 comment… read it below or add one }

1 Jeff 10.26.09 at 10:13 am

I have met with a number (~15) of different advisors over the past year and have found that none really took the time to understand my situation, or try to compliment the knowledge on personal investing I have.

Most made me take a questionaire, then told me that I have a mid-range acceptance to risk and told me to put all my money in an Index Fund.

Why should I pay them for the default, I want to get information from them to tell me the particular markets that are doing well, and more importantly WHY. I also would have liked a better idea of market cycles, however half when I asked about this didn’t understand what I was talking about.

I have found that most “advisors” do it because it is basically sales, and that is all they are qualified for with their business degree.

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