The old stereotype about investment fraud victims, that they are usually isolated, frail and gullible is no longer. Recent research has shown that those typical of falling victim to investment fraud are self-reliant, optimistic, have above-average financial knowledge and are college educated.
In fact, research conducted by the FINRA Foundation found that consumers are overconfident in their knowledge of financial management, particularly baby boomers. A recent survey found that 92 percent of investors ages 55 to 65 felt "somewhat" or "very confident" about managing their finances. However, many of their reported investment behaviors put them at risk.
Before you invest:
Check out brokers. Always research the professional background of firms and investment professionals, including any available reports, previous penalties, and more. FINRA's free online tool can help you thoroughly research any broker your considering.
Ask questions. Before giving out information about yourself, ask if they or their firm is registered with FINRA and the SEC. Ask questions about the specific investment and whether or not it is registered with the SEC or your state security regulator.
Talk to someone first. Be extremely skeptical if the person promoting the deal says, "Don't tell anyone else about this special deal!" A legitimate investment professional won't ask you to keep secrets. Consult your family and a trusted financial professional before moving forward.
Gain valuable investment knowledge. The FINRA Investor Education Foundation offers educational publications and other materials to consumers free of charge.