Seeing as how Waste Reduction Week falls in the middle of Investor Education Month, I did some brainstorming and came up with my 3-Rs of safe investing: research, and registration and re-evaluation. Follow these 3-Rs to help ensure your hard earned money doesn’t go to waste!

Research – Always, before you invest, do your research. What do we mean by this? Basically, you should never invest in anything you don’t understand. We don’t expect you all to be financial experts, but when it comes to your own portfolio, you should know (and be comfortable with) what is going on. Find out more about the companies you invest in. Your adviser can supply you with some information, but you can also check with the Better Business Bureau, in the news or online.

Be sure to understand the type of fees and commissions you are paying. Are there rules or restrictions involved in the kind of investment you are buying, or the account you are opening? Be sure you know how (or if!) you can access your money if you need it. Read the fine print, and ask your financial adviser, lawyer, accountant or other trusted adviser for clarification. Read How to do a background check to get yourself started. Still have questions? That’s why we’re here. Ask us!

Registration – Always, always check the registration of your financial adviser. You can find this information using the Canadian Securities Administrators’ National Registration Search, and searching for a company or individual by name to find current and historical registration information.

Nova Scotia laws require investment advisers to be registered with the securities commission (with certain specific exceptions). The company an adviser works for must also be registered in Nova Scotia. This regulatory system helps to make sure that all registered dealers and advisers meet certain minimum standards. If your adviser is not registered, contact us to find out if they qualify for an exemption.

Re-evaluate – What may have been a good investment decision two, five or ten years ago might no longer be suitable. Think of how much your life can change in just a few years. Maybe you have young children to consider. You’ve been married, or your marriage has ended. Perhaps you are getting ready to retire. Whatever the changes in your life, they will change your financial needs. It is a good idea to sit down once a year with your financial adviser and review your financial plan and your portfolio.

With fraud attempts so prevalent, how can you work to protect yourself? To start, you want to be familiar with the Red Flags of Fraud – five signs that an investment opportunity might be fraudulent or inappropriate.

To help investors become more familiar with the signs of fraud, and more comfortable in their investment decisions, my colleagues at the Alberta and BC securities commissions have combined forces to provide an online tool to help you learn how to protect your money.
The interactive tool entitled Investment Scams: How to Protect Your Money, focuses on some common methods that fraudsters use to approach potential victims – via friend and family or ‘affinity’, the Internet, seminars and advertisements. The online resource engages users with an opening quiz and testimonials to raise awareness of the ways fraudsters attract their victims. The testimonials are based on real cases depicting how people are drawn into scams.

The comprehensive tool provides information about how to recognize, research and prevent fraud. Offered as modules that can be easily accessed and shared, the resource provides investors with checklists and tips to help them evaluate and research investment opportunities for risks and potential fraud. As well, there are features within the resource to help investors directly email questions to a person offering them an investment and submit a complaint to the securities regulators.

To try it out for yourself, visit the site of either the Alberta or British Columbia Securities Commissions. Some of the information presented will be specific to those provinces. To see how the same might apply in Nova Scotia, contact me, or pose a question in the comments below.

Also available, from the Alberta Securities Commission, is a similar tool Who’s Taking Care of Your Money? This online course guides you through the process of choosing and working with a financial adviser. For both novices and experienced investors, it includes information on managing your relationship with your adviser, and how to file a complaint if needed.

(Read the Globe and Mail article: Dozens fall victim to apparent scheme.)

The Jones case displays some very real and disturbing characteristics of investment fraud, primarily:

1.  You don’t have to be rich to be a target of fraud.

According to reports, while some of Jones’ alleged victims lost hundreds of thousands of dollars, others had invested much less – as little as a few hundred dollars.

2.  Fraud is often carried out by someone you know and trust.

Jones was well known to his victims: a hockey coach, a longtime friend. He gained their trust, and then became their financial adviser. It didn’t occur to anyone to check the credentials of someone they knew so well. Had they looked further, they would have seen that Jones was not registered to trade in securities.

Jones’ clients were not limited to Quebec, they ranged from coast to coast, including Nova Scotia.

Anyone who believes they were victimized by Jones (or anyone else) should contact their local securities administrator. For more information, read how to report a suspected scam.