Money Advice

Know the red flags of an investment scam

Posted by The Simply Money Team on Mar 22, 2017 3:33:50 PM

Just recently, federal officials arrested a Warren County man and his wife who admitted to defrauding investors out of more than $70 million!  And before you say, “Oh, that could never happen to me,” that’s probably what these latest victims thought to themselves as well. Here’s Simply Money Advisors’ advice for better protecting yourself and your money.

Falling for an investment scam is easier than you realize: The “advisor” usually seems very trustworthy. The quintessential “good guy.” He or she usually plays to something you have in common, be it religion, ethnicity, or some other shared interest.

Be suspicious of high returns with no risk: A tell-tale sign of an investment scam is if the so-called “advisor” starts touting that his or her investment strategy is “risk-free,” or that he or she can get you guaranteed returns. But there is no such thing. Every single type of investment comes with some degree of risk.

Question returns that are too good to be true: This is easiest to spot when the stock market is down. If the overall market has lost value, but your returns are consistently positive by a significant margin, that’s a red flag. Remember, investment values go up and down over time.

Can’t get your money? Bad sign: In the Warren County case, when the scammers were late on interest payments to their investors, officials say the scammers lied, creating excuses that included their bank account had been hacked. If you have difficulty getting your money out of its accounts (or can’t get it out, period), that should set-off your internal alarms.

Look for the “third party” custodian: If you have money invested with an advisor or firm, your actual assets should be invested with what’s called a third-party custodian. This company is responsible for holding and safeguarding your money. Examples would be Fidelity, Vanguard, or TDAmeritrade, the custodian we use at Simply Money Advisors. A reputable advisor should never ask you to make a check out to themselves.

The Simply Money Point

If you’re considering working with a financial advisor, you owe it to yourself to do your research ahead of time – don’t just rely on word-of-mouth. The easiest way you can check out an advisor or firm is by going to All it takes is a few seconds. If the individual or firm isn’t listed, that means they’re not registered professionals. Run the other way as fast as you can.

If you want a second opinion on any financial service or product you’ve been pitched, our team at Simply Money Advisors is here to help.

Get Started

Topics: Scams & ID Theft Alerts


Please remember that past performance may not be indicative of future results.  Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by Simply Money Advisors), or any non-investment related content, made reference to directly or indirectly will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful.  Due to various factors, including changing market conditions and/or applicable laws, this content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained here serves as the receipt of, or as a substitute for, personalized investment advice from Simply Money Advisors. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing. Simply Money Advisors is neither a law firm, a certified public accounting firm, nor a tax advisory firm and no portion of the blog content should be construed as legal, accounting, or tax advice. Please consult your own attorney, accountant, and tax advisor for legal, accounting, and tax advice. A copy of the Simply Money Advisors’ current written disclosure statement discussing our advisory services and fees is available for review upon request. Advisory services offered through Simply Money Advisors, a SEC registered investment adviser. Insurance services are offered through Simply Money Insurance Agency, a separate entity from Simply Money Advisors. Simply Money™ and the spiral symbol are trademarks of Simply Money IP Holdings, LLC.

Simply Money Advisors

Your trusted financial planning partner helping to protect your money and make it grow.

Subscribe to Blog Updates

Recent Posts