2. A sense of urgency
A calling card of suspicious investments is a sense of urgency — which often proves to be false. Perpetrators want to rush investors into a decision so there’s no time for due diligence. But any sound investment that’s here today will be here tomorrow, even if the price is slightly higher.
Such scams include “hot” stock tips and “once-in-a-lifetime” opportunities, both of which usually promise exclusive information that simply doesn’t exist. Then there’s a recent example that used some real information to stir up fears about a fake problem.
A pitch making the rounds this year promised April 10 would bring a “retirement blackout” unless investors acted quickly to participate in a little-known tax haven with potentially big returns: the 26(f) program. The alleged doomsday was actually a deadline for the fiduciary rule to take effect, which was intended to benefit retirement savers. And as for that mysterious 26(f) program? It was apparently a loose reference to mutual funds.
This particular pitch was debunked by several people online, but it’s not always easy to identify a scam. Schaefer urges his clients to call him whenever they receive an opportunity that doesn’t quite add up. “It’s better to be safe than sorry,” he says.
For retirees who’ve managed their finances all along, it can be unsettling to hand over the reins late in life. That’s why it’s important to find a reputable broker or advisor, ideally one who acts as a fiduciary. The Financial Industry Regulatory Authority’s BrokerCheck is a good place to start. This free tool lets users research the backgrounds of financial brokers, advisors and firms.
“Always make sure to verify the license and registration of anyone who is handling your investments,” says Amy Nofziger, director of regional operations with the AARP Foundation.