Finding Financial Fraud

How do you smell a rat?

Detecting financial fraud can be challenging. We know there are lots of people who want our money. It’s taken us decades, sometimes a lifetime, to build a nest egg. It’s important to safeguard it. But in the real world people lie, cheat, and steal. Financial products are especially prone to distortion and deception, with complex legal provisions and mind-bending mathematical formulas. How can we protect ourselves?

First, be suspicious. Ask questions. Double-check the answers. If it’s taken years to grow your wealth, spending a few weeks or months checking out someone’s references and reputation is reasonable. Second, don’t lose sight of your money. Regular statements—or online access—should be available. And question anything you don’t understand. Third, remember that risk is part of the game. We live in an uncertain world, where unexpected things happen. If someone offers you a risk-free product with guaranteed returns, they’re probably lying. Don’t walk away, run. Finally, follow the money. It may seem rude, but ask any financial professional how he or she is paid. Incentives matter. You shouldn’t feel that your savings are supporting someone else’s lavish lifestyle.

In Act 2 of Henry V, Shakespeare shows how Henry uncovers a plot to assassinate him just before he leaves for France—by asking his advisors questions, keeping them close, and following the money. It’s a key scene that shows how Henry has matured. In the same way, we need to protect ourselves and stay on top of our finances.

Because if something sounds too good to be true, it probably is.

Douglas R. Tengdin, CFA
Chief Investment Officer
Phone: 603-224-1350
Leave a comment if you have any questions—I read them all!

Follow me on Twitter @GlobalMarketUpd •
By |2014-09-18T09:57:48-04:00July 21st, 2014|Global Market Update|0 Comments

About the Author:

Mr. Tengdin is the Chief Investment Officer at Charter Trust Company and author of “The Global Market Update”. The audio version of each post can be heard on radio stations throughout New England every weekday. Mr. Tengdin graduated from Dartmouth College, Magna Cum Laude. He received his Master of Arts from Trinity Divinity School, Magna Cum Laude and received his Chartered Financial Analyst (CFA) designation in 1992. Mr. Tengdin has been managing investment portfolios for over 30 years, working for Bank of Boston, State Street Global Advisors, Citibank – Tunisia, and Banknorth Group. Throughout his career, Mr. Tengdin has emphasized helping clients manage their financial risks in difficult environments where they can profit from investing in diverse assets in diverse settings. - Leave a comment if you have any questions—I read them all! - And Follow me on Twitter @GlobalMarketUpd

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