How Can I Trust a Financial Adviser?

When I first arrived in Shanghai in 2014, one of the first people I met was a charismatic adviser trained as an expert in pension transfers. She was persuasive due largely to the conviction with which she delivered her advice. A few months later, she simply disappeared. Apparently she had been caught in some type of activity or conduct unbecoming to a person in her position of authority, responsibility, and trust. I suspected that she was, in fact, a criminal.

One factor that can keep expats up at night is this burning question: 

“When it comes to investment advice, who can I trust? How do I know the adviser isn’t just in it for the commission?”

Wherever large sums of money are involved, criminals are attracted. Because these people are often wily as well as charming, they can take some considerable time to catch. In the interim, they inflict severe damage to our industry. Sadly, I have heard tell of such rip-off artists while I’ve been an adviser. 

These tales of woe range from simple ignorance to deliberate acts of fraud. Indeed, my own family suffered at the hands of a sociopath. He deliberately took advantage of elderly friends seeking triple a-rated securities. Con artists prey on our vulnerabilities, which can boil down to a desire for growth, a need for security, or the two combined. 

In the expat world, things are even harder to gauge. What can we do to prevent being ripped off? 

Here are my top five tips to confound the conman (or woman):

Tip #1 Con artists often exploit the simple fact that we are swayed by appearance - they are immaculately dressed, sharp, witty, and intelligent. They're well connected and switched on. In these ways, they provide us with plenty of social proof that their advice is genuine. ANTIDOTE: Always separate fact from appearance.

Tip #2 Confidence artists (AKA "con artists") use time as a pressure tactic - the offer expires this week! You might not get access if you wait - when we feel something is scarce we tend to act more on emotion than on reason. ANTIDOTE: Take your time, do not be subjected to pressure tactics

Tip #3 Criminals will create convincing stories of vast experience and specialist knowledge. They may refer to (genuine) research institutions or other experts in a related field who are well known. ANTIDOTE: Don’t be swayed by reputation and always check the qualifications of the adviser

Tip #4 You may well be reassured that everything is safe, can’t go wrong, is a ‘no brainer’ etc. ANTIDOTE: Enquire as to the complaints procedure and ensure everything is in writing and signed by the adviser

Tip #5 Impressive growth figures will be mentioned frequently. ANTIDOTE: Never invest on the grounds your money will grow at a great rate.

I hope this quick guide provides at least a starting point on how you can identify criminals.

Have you been conned over money before? 

Share your experience by commenting below.