In the news, both in Canada and internationally, there have been many high-profile cases of investment fraud that have grabbed the headlines causing the average investor to consider if they have been misled in the advice and products they have purchased in hopes of achieving their investment goals.
The good news for investors in Ontario is that we have one most rigorously tested financial industry in the world and the vast majority of money invested in the province is with legitimate sources.
If you invest with our firm, either though the purchase of investment funds (both Mutual and Segregated Funds), GIC’s or other financial products, you can rest assured that you are dealing with qualified, licensed investment advisors with a process for selecting the best investment vehicles for our clients that is based on strict financial planning guidelines.
Our recommendations and trades on your behalf are approved by a branch manager who ensures that your stated risk tolerance is suitable for the investments chosen and our practice is enabled by a reputable, nationally registered mutual fund dealer in Manulife Securities, who approves the acceptable investments available for our clients’ consideration.
All of this activity is overseen by the Ontario Securities Commission who administers and enforces securities legislation in the province of Ontario. The OSC’s mandate ‘is to provide protection to investors from unfair, improper or fraudulent practices; and to foster fair and efficient capital markets and confidence in capital markets’.
However, we continue to hear about investors who have been duped by rogue advisors, internet scams, mortgage fraud and other untoward activity. If you have investments elsewhere and you are concerned that you may have received unscrupulous advice, or, if you or a loved-one have been approached to invest in what you are concerned might be a scam, it’s important to recognize the signs of investment fraud.
According to the OSC’s website (www.osc.gov.on.ca) you should ask yourself the following questions before you investment.
1.Are you dealing with a registered advisor?
Anyone selling securities or offering investment advice in Ontario must be registered with the Ontario Securities Commission (OSC), unless they are exempt from this requirement. To check whether someone is registered, call the OSC Contact Centre at 1-877-785-1555
2.Can you verify the investment with a credible source?
If you receive an unsolicited investment opportunity, get a second opinion from your registered financial advisor, lawyer or accountant, or call the OSC Contact Centre for assistance.
3.If you are promised a guaranteed return, is the guarantee given by a reputable financial institution?
Ask for proof of the guarantee in writing (it should be included in the prospectus or offering sheet) and remember, a guarantee is only as good as the person or company offering it.
4.Is the risk you are taking reasonable for the expected return?
In general, returns on low-risk investments are in the range of current GIC rates. If the expected return is higher than these rates, you are taking a greater risk with you money. Make sure you understand and can afford the amount of risk you are taking on.
5.Is the investment opportunity based on facts?
The sources of ‘hot tips’ or ‘insider news’ often have ulterior motives.
6.Do you understand how the investment works?
If you don’t understand how the investment works and the seller cannot explain it to your satisfaction, this should be a warning not to invest.
7.Have you had enough time to make a decision?
Don’t give in to high-pressure sales tactics like limited time offers. Take your time making investment decisions and never sign documents you have no read carefully.
All investors should be engaged with their advisors in developing their investment plan. They should take the time to understand the details in the information folder or prospectus that must be given to the client before they invest. As most client/advisor relationships are based on trust, it can be easy to want to just ‘take their word for it’ but this approach can lead being taken advantage of.
And most importantly, all investment advisors must work though a bank, credit union or investment dealer. When a client purchases an investment all cheques will be made out either directly to their advisors employer or firm or to the investment company.
Never write a cheque to your advisor directly or to his or her operating company. This is the most common way for clients to be taken advantage of.
If you would like a second opinion on any investments or other financial product that you current own, please don’t hesitate to call and arrange a meeting.
