Exaggerated Credentials - What To Look Out For?
It's not uncommon for fraudsters to misrepresent their backgrounds. They can also do the same with their experience to lure investors into investment schemes.
You can never be too careful when choosing an advisor to grow your investment portfolio. Since you stand to lose a lot, you should ensure your advisor is both experienced and trustworthy.
It is vital to verify the registration and license of the financial professional before investing. This is according to the SEC. Further, proclamations about a person's experience or credentials should not sway you to make an investment decision.
What Do You Look Out For?
Take a keen interest in a person's registration and licensing status. To do this, use either the:
SEC’s website on Investment Adviser Public Disclosure (IAPD) or;
Financial Industry Regulatory Authority (FINRA)’s website BrokerCheck
They also tell you everything you need to know about their background. This also includes any history of disciplinary issues against them. Also, contact your state securities regulator to get the person’s State licensing status.
Common Exaggerations and Misrepresentations
Some of the common misrepresentations by fraudsters include:
False Claims of Registration and Licensing
Make sure you check SEC’s investment advisor database if an investor claims to be a member of a body.
Fraudsters Misrepresent Their Education
They do not disclose that they are self-taught, with little to no training or experience. Still, they rely on misleading prospective clients into believing they are professionals by appearing to have extensive training and experience.
Some Fraudsters Also Lie About Being Recipients of Honors
To gain credibility and legitimacy, they might claim to have received recognition. Some of the awards they claim to have might not even exist. Some fraudsters go further and lie about;
The people associated with them
The profitability of their investments, and
The projected profitability of the investment they want to lure you into
Fraudsters Also Pretend To Hold Particular Professional Titles
In financial investments, someone might claim to be a certified financial planner. This tricks you into believing they have a certain level of expertise. In some cases, they aren't.
Claims of Guaranteed Returns
This should always be a red flag. There is no such thing as a guaranteed investment. Other ways
fraudsters trick you into believing in their façade include:
Appearing as guest commentators in finance television shows
Developing public profiles either through traditional media, social media, or the internet. This gives them a false sense of legitimacy.
Pretending to have certain positions or titles in certain companies
Inflating their professional experience
When investing, only deal with registered broker-dealers or investment advisers. This protects your investment and also affords you some legal protections.
When you are making decisions involving investment or finance, do not solely rely on a person's professional designation. Make sure you understand the meaning of the professional designation and what the person did to retain the designation. FINRA has composed an extensive database of professional designations that can be reviewed to learn more about the requirements of a particular professional designation that financial professionals use. Please go to https://www.finra.org/investors/professional-designations.