How to Identify Fake Financial Advisors

Let me start by saying that some of the kindest, wisest, most altruistic, and financially savvy people I know make their living as financial advisors. I believe those advisors would wholeheartedly agree that there are many in their industry that do not share that those qualities. ‎ ‎ The bad financial advisors generally do not like talking about how they make money. I have one friend who didn't understand the fees she was paying, so she asked her advisor something like "how am I paying you?". And he said, "oh, you don't pay me, my company pays me." She was obviously asking "how much am I paying in fees?" and he was trying to talk around the question by giving a coy answer about where his paycheck comes from.‎ ‎ The altruistic financial advisors will be clear, transparent and educational regarding their fees. They'll explain that they take a percent (e.g. 1% per year) of all of your assets under management. They'll explain they have no other commissions, monthly fees or transactional fees and that they don't get kickbacks from any of the investments they make on your behalf. They should additionally meet the bar as a "fiduciary" financial advisor, meaning that they're legally required to put your financial interest ahead of their own.‎ ‎ The bad ones will hide fees all over the place. One such fee is called a "front load". That's usually around 5-6% transactional fee they take off the top before any of your contributions make it into an investment. Another one is a "12b-1 fee". That's a kickback paid from a mutual fund to the financial advisor for getting your money into that fund.‎ ‎ Some advisors aren't even financial advisors at all. They're insurance salesmen who have used the term financial advisor to confuse new investors. If your financial advisor is suggesting you invest in any sort of cash value life insurance, I would run, not walk out of their office.‎ ‎ I don't use a financial advisor, but admittedly, I'm probably not a typical investor. If you do, make sure you clearly understand any fees and the long term impact they have.‎ ‎ Remember the two rules! ‎ -Jeremy‎ ‎ #financialadvisor #investing #money #personalfinance #finances #stocks #investingtips

I’ve interviewed hundreds of financial advisors. These are the red flags that make me run: (1) Managing 125+ Households: If you’re one of hundreds, expect minimal personal attention. (2) They’re New: Lack of real-world experience often means they haven’t weathered enough market scenarios. (3) They Job Hop: A pattern of short stints raises reliability questions. (4) Sloppy Online Presence: Sloppy public face often equals sloppy behind the scenes. (5) Regulatory Baggage: Check BrokerCheck or the SEC’s IAPD for complaints and penalties. (6) Credentials Overhype: CFP or CFA can be a huge plus. Real-world results also matter. Ask for references. (7) No Real Training: Formal education or proven expertise is key. If they lack both, that’s a red flag. (8) Bad First Impression: If they’re pushy or uninterested, trust your gut and walk. (9) They’re Scripted: Financial planning isn’t one-size-fits-all. Hiring an advisor is a major decision. If you see any of these signs, keep looking.

Investor Alert: Beware of Social Media 'Investment Group' Imposter Scams FINRA has seen a recent significant rise in investor complaints due to fraudulent "investment groups" promoted across social media. #Scammers pose as registered investment advisers, advertising "stock investment groups" on platforms like Instagram, later shifting to encrypted group chats on WhatsApp to pitch investments. Since November, FINRA has received numerous investor complaints, alleging losses totaling millions of dollars. Sadly, this might be just the beginning. These imposters falsely portray themselves as registered professionals, often fraudulently claiming ties to well-known public figures and respected figures in the investment industry. Scammers lure in investors by initially promoting investment in actively traded stocks, and then steer them into low-priced, low-volume U.S.- or Hong Kong-listed stocks, potentially causing significant losses. They coerce victims into opening accounts at specific broker-dealers and manipulate the price of securities, leaving investors unable to sell, eventually causing the value to plummet. To guard against these scams, be cautious of unsolicited investment messages and conduct thorough research into investment professionals before committing. Utilize FINRA BrokerCheck (brokercheck[.]finra[.]org) to verify credentials, and refrain from investing without independent evaluation. It's crucial to remain vigilant against these and similar fraudulent activities. #financialadvisors and #RIAs, if you're reading this, consider passing along these best practices to your clients to help ensure their financial security. If you believe you've been targeted by a stock manipulation scheme, submit a regulatory tip to FINRA. #InvestorProtection #FinancialSecurity https://lnkd.in/eWreqyqm