Flashy Clues and Second Opinions

photo shows one hand with white skin pointing to a piece of paper that another hand with white skin is signing with a pen

If you’ll forgive my language, I believe the way to “revolutionize” the financial services industry is quite simple: you just cut the crap.

The pushy peddlers of old aren’t entirely gone, and it reminds me to come back to the basics. Clients first. If you’re better off, I’m better off. Grow the buckets.

I recently met a person, well into the retirement years, who escaped some real damage by listening to their guts on a financial proposition. The peddler who almost got to them reminded me of the antics of a character I met as a young man starting out in the life insurance business, long ago.

This classic peddler fit every stereotype of the master salesman of the last century. Big pinkie ring, Cadillac, flashy suits. His motto? “Dazzle them with diamonds, baffle them with bull….”

It didn’t matter if you needed what he was selling or not. The question was, could he make a buck by tricking you into buying it?

The sales abuses are just as real today. Can you imagine tying up money for 10 years when you are retired, facing a huge penalty if you do want your money out, and getting mediocre returns just so a peddler can get a big insurance commission? It happens.

The bad news is, the obvious signs like pinkie rings and flashy suits are gone, replaced by a sea of nice websites with family pictures and flowery talk about your best interests and the peddler’s degrees and designations. The good news: you can always get a second opinion.

I’m in business to talk all day. If someone you know needs a second opinion, I’d love to talk to them. Here to help as I can.

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Gone Phishing

photo shows hands holding a cell phone showing "Unknown Caller"

The winter holidays are a busy season for everyone—including scam artists. One of the most common forms of fraud is known as “phishing.” Phishing attempts may happen as emails, texts, webpages, or automated phone calls that sound like they come from an official source.  

Identity thieves have been known to pose as businesses or government entities to trick consumers into sharing their information with someone they thought was an authority. Often identity thieves will claim there is some sort of problem and that you need to cooperate with them. (You can understand how someone might panic if they got a phone call suggesting they were in trouble with the IRS, right?)  

Another tactic may be telling you that you are entitled to money or other rewards, if you only give them what they need. 

The best way to protect yourself against identity theft is to stay calm and view the situation for what it is. Not sure whether you may be dealing with an imposter? Consider… 

How is the message arriving?  

  • Government agencies that have important matters to discuss with you will contact you via certified mail on official letterhead, not in a call or text. 
  • Expect official correspondence to sound professional and not contain obvious spelling or grammatical mistakes. 

What are they asking for?  

  • There is no reason for government authorities to ask you for your personal information such as Social Security number or date of birth. (They already have access to it: officials would be able to look it up themselves!) 
  • If someone is legitimately trying to give you money, they should not need money from you to facilitate the payment that is supposedly coming your way, nor would they need your Social Security number or other compromising personal details in order to send you money. 

Are they hurrying you? 

  • If you owe money to the government, officials will not try to get a credit card on the spot, and they will definitely not ask you to use PayPal or other online money transfer services.  
  • Remember that time is on your side. Very few legitimate issues are so urgent that you couldn’t hang up and take time to verify the situation.

Bundle up: add layers for protection. 

One way that we work to protect your accounts in case of identity theft is LPL’s Trusted Contact system. If we ever suspect that a request is fraudulent or that you are being manipulated, your trusted contact is someone we have permission to talk to about the situation to make sure that you are not being defrauded of your hard-earned money.  

Trusted contacts do not have authority to make changes on your accounts, but they can help verify that requests are actually coming from you and are on the level. It is up to you if you want to designate a trusted contact with us, but it is another layer of protection in case your identity is stolen. 

Clients, when you have questions about this or other topics please reach out. We’re here to help.

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Don’t Be a Pigeon

© Can Stock Photo / johny007pan

We recently were approached by a supposed investment firm. A quick review of its website raised many questions.

It seems obvious to us that the whole outfit might be a scam. But we have studied the economy and markets for a lifetime. So we thought it might be useful to lay out for you the main clues that set us off.

The most notable thing is the use of jargon that sounds authoritative but is incomprehensible. We mean this kind of nonsense: “We create global allocation by opportunistically investing worldwide as an important element in the diversification of our portfolio.” “Generate and protect investor wealth through the long term differentiated returns offered by our unique investment management strategies.” Yeah, right.

The second clue is the lack of disclosures relating to FINRA or the SEC, the primary U.S. regulators of investment providers. These folks are neither registered to sell securities nor as investment advisors.

The third clue is the promise of high returns, which evidently are guaranteed. 12-20% annual returns sound pretty good, right? And different investment return options, guaranteed in writing? Be still, my beating heart!

The fourth clue is the promise that investments are liquid at all times.

We promise volatility, and make no guarantees. This is because we know that stability and investment returns are mutually exclusive—you must choose. Anything that is truly guaranteed carries a remarkably low yield, in our opinion. And anything that purports to offer the opportunity for high returns cannot be guaranteed.

The interesting thing is, that web site and those promises are up there for a reason—they work. People desire stability and high returns, and the knowledge they can get all their money back at any time.

Clients, if you ever have questions about something that seems too good to be true, PLEASE email us or call. You worked too hard for the money to let a scammer get it.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.

Never Get Scammed Again

Suspicious business deal

We believe that the best way to make money is to earn it by providing a valuable service that people will pay for. Unfortunately, some would rather make money by cheating you out of yours.

We know that if a story sounds too good to be true, it probably is, but it’s not always so easy. Con artists try to get you to let your guard down by buttering you up. Often, a fraudulent pitch begins with the idea that you would be rich if only you could get in on those special deals that only the rich can normally get into. The con artist offers a way in, and people fall for it because they want it to be true.

Fraudsters also like to provide plausible-sounding explanations for their unrealistic promises. One of the best ways to spot a hole in their story is by looking for things that don’t go together.

A few years ago a client managed to avoid a Missouri cattle-feeding scam by knowing that “guaranteed returns” should not be in the same sentence as “cattle feeding.” The pitch for cattle feeding profits made sense, but they knew the cattle business had no guarantees. In the second biggest scam in history, the Stanford Bank claimed it could pay 8% interest due to low overhead, but another client realized that 8% interest did not belong in a world of 4% rates no matter how low the overhead was.

These schemes have plausible explanations on the surface. But even when the details sound reasonable, looking at the big picture usually reveals the details do not match up with each other. If somebody wants you to invest in a way that does not quite make sense, please call us.