Stockbrokers should be financial advisors who are hardworking and they do their job for the common interest together with their clients. One of the most important things you must be aware of is that there is a huge difference between frauds and expected investment losses. Most of these people are transparent, and they honestly work in your interest, and they charge you a reasonable fee because of that. But, there will always be some individuals who will try to scam you, by manipulating the numbers and showing misleading results. Even though their number is pretty small, you need to be careful, so you can prevent being their next victim.
Before you take critical steps with your money, you should look for more information online. You have to make sure you are hiring the best broker around you, who will not try to make easy money on your efforts to be a successful investor. But, as we said, it can happen to anyone, no matter how hard we try to protect ourselves. It’s crucial to recognize the signs that they are cheating, so you can fire them before the damage is done.
Here are some of the warning signs you need to be aware of:
1. Unauthorized transactions
They are claiming they needed to take additional money, and that it’s a part of the deal. That’s also known as stockbroker misconduct activity. Every transaction should be authorized by you. Any other case is a red alert and a clear sign of fraud.
2. Weird people try to contact you for deals
The investment is between you and the broker. No one else should know about your plans, and a legit stockbroker is discrete and dedicated to you. If they give your contact information to other people, and they call you trying to invite you to make other investments, offer bonuses and gifts, or try to make your work with them, instead of your initial choice, then probably your broker is not discrete as he/she needs to be. It’s a pressure tactic, and you probably need to fire the current broker, because obviously, they are a part of some scheme that will use all your money, getting almost nothing back.
3. They claim they have secret sources
There is no such thing as that – just like there is no way for someone to know the exact outcome of some action. Don’t hold to their claims they know exactly how things will go. They are here to advise you on what’s scientifically the best way to invest but to let you make the final decision. So, if you see some unethical practices, and they never mention that there is a risk too, you can’t trust this person at all. Speculations aren’t welcome in investments, so you need someone who really knows their job, but still, help you manage the money better than you can do it by yourself.
4. Yours and their records don’t match
As an investor, it’s always a good idea to run your own records, so you can be sure everything is documented and sealed in your file. But if you see that the broker is providing different financial statements, and the differences are pretty big, then you need to revise all the activities alone, together, or with someone else, just to be sure you haven’t missed something.
5. They always charge additional fees
No matter what they do, they calculate additional fees, making the complete cost much bigger than the one you initially agreed upon. It seems like the fee is small, but if they charge it too often, and it’s getting bigger as time goes by, then you have to talk openly to the broker, face them with the facts, and see how they react.
6. You are losing when everyone else makes a profit
If you lose money too often, and the other people are making profits on similar investments, then it’s the right time to revise all the activities the broker performed on your behalf. Any suspicious activity is proof they are doing something wrong. Sometimes they may not be aware of that, but chances are they are doing it on purpose.
7. Something doesn’t seem right
You can follow their behavior and the way they deal with critical situations. You can pay attention to their body language and the way they assure you everything is fine. It’s good to trust your gut, especially when it alerts you something is completely bad or wrong. Pay attention to what’s happening, and you will be able to see if they are making suspicious movements, or simply, is not a good time for a profit.
How to prevent scams?
It’s always a good idea to look for authorized advisors. They are usually part of financial companies, and they provide a number of services related to trading, investing, and making profits. If you are suspicious about what your broker is doing, collect all the available information on your trading accounts, bank account, and other documents that can be useful so you can show they are doing the things on purpose. Every bank statement can be used, even when they charge so-called fees.
The next step is to fill up police complaints, hire a lawyer and file a lawsuit. Keep in mind that these people are experienced in misconducting things, so they can seem like they are right, and you are the one who is wrong. But, if you are sure you are a victim of an organized scam, you need to collect all the proofs that refer to that and work on the case together with your attorney.
Remember, if you don’t stop them on time, a lot of people will become their victims.
So, if you see unauthorized activity on your behalf, or if they charge a lot of money for no reason at all, it’s time to face them with the facts, and fire that person immediately. That’s one of the best things you can do to save your money and of course, your trading dignity on the market.