1 in 8 wealthy clients falls victim to a financial scam – here’s how to stay safe

Worried senior couple reviewing financial paperwork

Financial scams are becoming more common and harder to identify, so it’s understandable if you feel concerned about getting caught out, especially if you have considerable wealth to protect.

A new survey published in Professional Adviser has found that 1 in 8 high net worth clients have fallen victim to a financial scam in the last six months, losing an average of just under £13,000.

Read on to discover how to spot the most common financial scams and learn how to protect yourself from financial criminals.

2 common types of financial scam to look out for

Investment scams

Typically, the scammer will try to get you to hand over money for an “incredible” investment opportunity.

A common example of an investment scam is where the scammer clones a legitimate website to persuade you to send money. Or they might try to sell you stock that doesn’t exist.

These scams can be extremely complex and convincing. Often, the scammer appears knowledgeable and has a professional-looking website, client testimonials and marketing material to support their claims.

However, they all generally have one thing in common – they offer to deliver high returns in a short amount of time, for very little risk.

Pension scams

Pension scammers target victims of all ages. They might try to entice you with promises of higher returns than your current provider offers.

Common pension scams include pretending to be from a government-backed organisation to gain your trust. Or, telling you that there is a loophole which will allow you to access your pension before the minimum pension age of 55 (rising to 57 in 2028).

Sales phrases like “savings advance” and “cashback” might also suggest a need to be extra vigilant.

Red flags of investment and pension scams

There are some red flags that might suggest you’re being targeted for a financial scam.

  • An unsolicited approach by email, phone call, or even in person
  • Hard sell tactics, such as time-limited deals, that pressure you to act fast
  • Limited or overseas contact details that make the company hard to check up on
  • “Guaranteed” returns on investment that seem too good to be true
  • Complicated jargon that makes the terms and conditions unclear
  • Emails asking you to click on a link and enter personal information.

How to protect yourself from financial scams

While scams have become more common and sophisticated, there are steps you can take to protect yourself from falling prey to a fraudster.

Don’t be rushed or pushed into making a decision

A legitimate company will understand that transferring your pension or investing in a new opportunity is a big commitment and one that you probably won’t want to rush.

If you feel pressured to decide by “here today, gone tomorrow” offers, it might be wise to walk away.

Research any new opportunities thoroughly

Scammers are often masters in the art of persuading people to do what they want them to. So, try not to take anything at face value.

Take the time to research any new opportunity to check that it’s legitimate. And seek verification beyond that suggested by the company.

Fortunately, there are several free online tools you can use to check whether a financial firm is legitimate.

The Financial Conduct Authority’s (FCA) ScamSmart Investment Checker allows you to find out if an investment or pension opportunity has been flagged as fraudulent. You can also use the Financial Services Register to check whether a financial firm is regulated by the FCA and authorised to transact in the UK.

Review the source of the information

If you’re contacted with an incredible offer, ask yourself whether this organisation or company is likely to contact you in this way.

Scammers use social media, email, WhatsApp and other methods to reach out to potential victims, and their means of communication may expose their fraudulent intent. For example, the government banned companies from making unsolicited phone calls to people about their pensions in 2019, so if you’re contacted in this way it might be a red flag.

A legitimate firm – like your bank or an insurance provider – will never contact you to move money to a new account.

Also, check for spelling mistakes and any suggestion that the message or website has not been created by a professional company.

Seek financial advice before making a commitment

Even the most diligent person could be taken in by a sophisticated financial scam.

So, it might be wise to seek professional advice before making big decisions about your pension or committing to a new investment opportunity. A financial planner could give you peace of mind that you’re making a good decision or help you identify a fraudulent scheme.

If you’re concerned about how to protect your wealth from financial scammers, we can help.

To find out more, please get in touch. Email or call us on 01454 416653.

Please note

This article is for general information only and does not constitute advice. The information is aimed at retail clients only.

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