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Finding the right financial advisor requires careful research. You should always check the advisor’s background and credentials before hiring them. A good place to start is by looking up their CRD record to see their employment history, licenses, and any disciplinary actions. Unfortunately, investment fraud and bad financial advice are far too common. According to a study by the Investor Protection Trust, over 7 million Americans have lost a significant amount of money due to investment fraud.
Some red flags to watch out for when choosing a financial advisor include:
- Promises of guaranteed high returns with little or no risk
- Pressure to make quick decisions
- Advisors who are not properly licensed or credentialed
- Lack of clear communication or evasiveness
Even well-known firms are not immune to employing bad actors. For example, in 2016, Wells Fargo was fined $185 million for opening millions of unauthorized accounts. According to Forbes, over 5,000 employees were fired for engaging in this illegal practice.
If you believe you have been the victim of investment fraud or received bad advice from a financial advisor, it’s important to take action right away. Keep detailed records and report the incident to regulators like FINRA or the SEC. You may also want to consult with an experienced securities arbitration attorney to discuss your legal options.
By doing your due diligence and knowing the warning signs, you can help protect yourself from falling victim to investment fraud or bad financial advice.
