Identifying and Avoiding Financial Advisor Fraud In 2024

Steering through the turbulent financial markets today is certainly not easy for an inexperienced individual who wishes to profit from them. In that sense, it is always recommended to acquire a guide and a navigator who can offer advice when it’s most needed. These individuals are called financial advisors.

While there are thousands of renowned professionals in this field who are educated, experienced, and well-respected for their knowledge and wisdom, others are just frauds.

Charlatans who try to impersonate Forex trading experts today easily spoil the reputation of the profession as a whole. However, they also remind us that financial swindlers are ruthless in their plans to find a way inside our wallets. That’s why our article offers insight into how financial advisor fraud operates and how to recognize its commonly employed methods.

What is Financial Advisor Fraud?

Unfortunately, lack of education and laziness have prompted many fraudulent individuals to look for ways to present themselves as something they’re not. Most commonly encountered are boiler room operators and charlatans who know nothing about online trading but try to appear as if they’re professionals.

These unscrupulous individuals use many strategies to make their victims believe they are indeed qualified to provide financial advice. Since they lack analytical skills and trading experience, they have sharpened their persuasion and impersonation abilities.

By imitating esteemed online trading veterans or fraud recovery lawyers, these con artists impress their potential targets and make them believe they offer credible financial advice. In fact, whoever pays for their guidance is more likely to lose their entire investment.

Common Tactics Used by Fake Financial Advisors

Now that we understand who false financial advisors are, it is important to learn more about the particular methods they use in order to deceive their victims. All these methods aim to confuse the targets and manipulate them for a single goal – getting paid.

What all these cons have in common is extorting money at any cost. Whether they present false proof of education or pressure their victims into investing, the final outcome is always the same: victims are robbed.

Fake Regulatory Certifications

Whenever an authority or regulatory body is mentioned in conversation, what is said carries more weight. What financial advisor scams attempt to achieve by presenting false regulatory permits is impressing their victims.

Targets are always more likely to believe in the validity of a deal when they hear that an authority has approved it. It is not at all rare to see financial swindlers forging certificates to gain their targets’ trust.

This was pushed even further in recent years when cybercriminals started getting falsely licensed by made-up regulatory bodies. ASIC, the Australian financial watchdog, has posted a list of known fake regulators based on investment fraud complaints.

High-Pressure Sales Tactics

Unsolicited phone calls, followed by a flood of suspicious proposals in your email inbox, are most likely fraud. Such companies and individuals may come off as desperate and pushy, to the point of being completely obnoxious and unreasonable, even after their offer is rejected.

Of course, they will glorify and exaggerate the quality of their advice. These manipulators blatantly lie about their skills and insist on their flawless judgment, knowledge, and wisdom – and the victim should know better than to question them!

Make-believe financial swindlers will use the idea of perceived scarcity and often pitch a “limited time” offer, shortening the time during which the victim may think and reconsider the investment.

Promising Guaranteed Returns

A large number of financial fraud complaints pertain to schemes that promise high, stable returns yet deliver none of what they initially guaranteed. Tricksters who want to get paid will often try to persuade targets to purchase their advisory services because they can bring a certain profit.

Beginner traders and inexperienced investors are particularly easy targets. Without the necessary knowledge or experience, they believe they can make money just by investing. Forex novices are often willing to entrust their cash to a false trading expert with the hope of earning passive income. This makes them more susceptible to becoming victims of illicit investment schemes that promote guaranteed returns.

How to Identify Unregulated Brokers?

All unregulated online trading firms and false advisors display several characteristics that make them easily recognizable. For instance, they lack transparency about their company’s legal background.

They will either try to present falsified data and forged licenses or refrain from publishing any corporate information at all. That includes specifics about the true costs of their services.

Moreover, unregulated investment campaigns tend to offer risky trading conditions because having no license gives them the freedom to do so. The most common among them is increased leverage, which is a double-edged sword for every trader.

The majority of these companies are established offshore, in tax havens that impose very loose regulatory conditions or conduct no supervision over securities dealers at all. However, to hide the truth about their foul intentions, illicit brokerages may even publish false reviews online to appear popular and credible.

Steps to Verify Your Broker and Financial Advisor

Before committing your capital to an attractive investment proposal, it’s of utmost importance to first verify the validity of the broker’s claims. While countless platforms can make statements about being properly regulated, only those who own a license can be considered legit.

If you doubt your broker’s legal status, you can easily check with the authorities if their claims are true. All leading regulatory bodies keep databases of the entities they supervise. Simply use the broker’s name or license number to search the register and make sure they’re indeed certified.

Never be afraid to do research, read reviews, ask online, and question things. After all, it’s your capital on the line. Being vigilant and thorough in your investigation can spare you the trouble of working on recovering lost funds later.

What to Do If I Fall Victim to a False Financial Advisor?

It is understandable to want to increase your existing capital through various investments. However, you might face a loss if you don’t learn to manage risks and choose your broker partner right. By that, we don’t just mean a failed investment, but much more money lost to financial cons.

If this has happened to you already and you’re looking for a way to retrieve stolen funds, contact our fund recovery company.

Our legal professionals specialize in the particularities of the chargeback process and can help you regain control over your investment lost to cyber thieves. Contact us today and book your free consultation when it is convenient for you.