The recent news about scammers and hackers has many thinking about how to protect against these attacks in the area of financial advice. Below we go through some simple things that if they were done by many victims of the fraud, they would have stopped the scammer in their tracks.
For those who were robbed by Melissa Caddick, a few simple steps that take less than 5 minutes would have saved them their life savings.
1. Check you are dealing with a Licensed Adviser - Melissa Caddick wasn't an authorised financial planner: she was not licensed with the government regulator Australian Securities and Investment Commission (ASIC). To be authorised by ASIC you have to have the required qualifications, experience, background checks and insurance. If they had done this, they would have discovered that she did not have the legal right to provide advice and saved themselves a whole heap of money.
Lesson: search 'MoneySmart Financial adviser register' Don't use links the 'adviser' has provided you as they may be to fake sites. Search their details independently on the government's MoneySmart site or directly on the ASIC professional register. Thoroughly check the spelling of the name and company and contact details. ASIC says that many scammers use similiar names of legitimate advisers/companies to leverage their brand.
2. Check Partners - Financial advisers don't operate in a vacuum. They must work with other oganisations. For example we work with Mason Stevens who do our trades and hold our client money in trust for our client. Our clients have independent access to their investments and superannuation via Mason Stevens. Our clients can visit Mason Stevens, call them or email them to verify our relationship. Mason Stevens also requires us to verify our services, qualifications, authorisiations, licenses and experience.
If the adviser has no service partners, ask why. It is impossible to trade shares without going via a licensed broker. If they recommend real estate they may have less partners but they will still be required to interact with agents or brokers. They can provide those details and you can verify their authenticity.
Lesson: Independently contact the partners of the adviser and ask if they deal with the adviser. We welcome you cross checking us with our partners like Mason Stevens.
The first check would have saved all of Melissa's clients from her theft. The second check would have stopped it continuing.
Like many, during Covid, I contacted my super fund and was awaiting a call back from them. Whilst waiting for my super fund to call, I received a call about my super and they wanted me to verify my details before continuing with the call. I almost started to when I remembered my code: make them verify who they are first. They failed that test and I luckily escaped handing over my super details to a scammer.
How to avoid scammers:
3. Reject cold calls regarding investment and superannuation - If you receive a call from someone offering you an investment opportunity, and you have not asked them to call you, then terminate the call. If you have asked the organisation to call you, still get them to verify who they are as the scammer just may be lucky like they were during covid.
Lesson: Always verify who you are dealing with before handing over ID, personal details or money. Do checks 1 & 2 above as well.
4. Keep emotions in check - Scammers will trigger your emotions to make it hard to make rational decisions. Over the last 3 years, with interest rates so low, a return of 8-20% would have been amazing. Enticing. If you feel fear that you will miss out if you don't find out more, check yourself and get off the call or at least ask for proof of the returns. Fear of Missing out is nothing compared to the pain of losing it all. According to ACCC, in 2021 investors lost $701 million in fraud in just one year.
Lesson: Recognise your emotions being played. Take time out to investigate the returns.
Always check and independently verify. This is critical. If you do this before giving away any information, you improve your chances protecting your savings.
These 4 quick and simple steps could save you your life savings.