How Investors Can Avoid Getting Fooled: 5 Tips From FINRA

WASHINGTON–(BUSINESS WIRE)–On the eve of April Fools’ Day – which also happens to be the first day
of Financial Literacy Month – the Financial Industry Regulatory
Authority (FINRA) offers five tips to help investors avoid being tricked
out of their money.

“April 1st is a day to indulge in silly hoaxes and pranks.
But there’s nothing funny about a fraudster carrying out a scam – and no
one will yell ‘April Fools’ to make the harm melt away,” said Gerri
Walsh, Senior VP of Investor Education at FINRA. “So instead of offering
practical jokes, we’re marking the start of Financial Literacy Month
with practical tips for becoming a smarter investor.”

  1. Know
    with whom you’re dealing
    . When choosing a financial
    advisor, consider your financial needs and goals, and what types of
    people or firms you could work with. Ask people you know for names of
    professionals they’ve used, but don’t stop there – interview a
    selection of candidates. Ask lots of questions: have they worked with
    people like you; verify their background; how are they compensated and
    what fees and expenses they charge. Always work with registered firms
    and individuals, and check employment and regulatory histories. You
    can do that quickly, easily and at no charge with BrokerCheck®.
  2. Understand
    how to work with your advisor
    . Be clear and honest about your
    investment goals and the amount of risk you are comfortable taking.
    Learn about any investment before you make it. And remember: it’s not
    enough to read the sales material or offering documents. Make sure you
    truly understand the investment or strategy by asking lots of
    questions about potential risks and rewards—and how the investment
    will help you achieve your goals. Keep a vigilant eye on your account,
    including fees, account statements and transaction confirmations. Be
    wary of sales pitches that make exaggerated claims about performance
    or predictability.
  3. Know
    the different types of investments
    . Think of the various types
    of investments as tools that can help you achieve your financial
    goals. Each has its own set of features, costs, liquidity, risk
    factors and purpose. And so you should ask questions about all of
    these elements—and also consider which mix of investments can best
    help you achieve your goals. To do this, make sure you are at least
    generally familiar with bank products, bonds, stocks, investment funds
    and products for specific purposes like saving for college or
    retirement. Never approve a purchase an investment or sign a contract
    without fully reading and understanding everything about the product.
  4. Look
    for the warning signs of fraud
    . Look out for guarantees,
    unregistered products, overly consistent returns, complex strategies,
    missing documentation, account discrepancies and push salespeople. The
    vast majority of advisors are trustworthy, but there are still others
    who will seek
    to take advantage of your trust
    . Practice spotting the persuasion
    tactics that con artists use, and always exercise healthy skepticism.
  5. Don’t hesitate to ask questions. If that’s not already clear
    from the tips above, remember this: it’s your money, why shouldn’t you
    feel completely comfortable about trying to protect it? Never worry
    about appearing uninformed, and remember there are no stupid
    questions: how does this product work, how can it go wrong, is there a
    cap on the return, is it a registered product, can I sell it quickly
    and easily, how are is the seller compensated, etc. If your questions
    are not answered to your satisfaction, then your response is clear:
    tell them, “no” – you’re no fool in April or any other time of year.

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Investors can obtain more information about, and the disciplinary record
of, any FINRA-registered broker or brokerage firm by using FINRA’s
BrokerCheck. FINRA makes BrokerCheck available at no charge. In 2015,
members of the public used this service to conduct 71 million reviews of
broker or firm records. Investors can access BrokerCheck at or
by calling (800) 289-9999. Investors may find copies of this
disciplinary action as well as other disciplinary documents in FINRA’s
Disciplinary Actions Online database
. Investors can also call FINRA’s
Securities Helpline for Seniors
 at (844) 57-HELPS for
assistance or to raise concerns about issues they have with their
brokerage accounts and investments.

FINRA, the Financial Industry Regulatory Authority, is the largest
independent regulator for all securities firms doing business in the
United States. FINRA is dedicated to investor protection and market
integrity through effective and efficient regulation and complementary
compliance and technology-based services. FINRA touches virtually every
aspect of the securities business – from registering and educating all
industry participants to examining securities firms, writing rules,
enforcing those rules and the federal securities laws, and informing and
educating the investing public. In addition, FINRA provides surveillance
and other regulatory services for equities and options markets, as well
as trade reporting and other industry utilities. FINRA also administers
the largest dispute resolution forum for investors and firms. For more
information, please visit


Financial Industry Regulatory Authority (FINRA)
, 212-858-4387