Safeguarding Your Wealth: Protect Yourself Against Investment Scams

With the increasing reliance on the convenience of online transactions for everything from shopping and groceries to banking and investing, many individuals are also seeking investment advice online. Unfortunately, this approach can result in misinformation, poor financial decisions, and significant monetary losses.

“Fraudsters are becoming extremely sophisticated in their methodology, and social media and direct messaging platforms are being used more frequently to deceive unsuspecting individuals,” says Pam Brenman, Chief Compliance Officer, Newport Private Wealth. “Victims are enticed to invest large sums of money lured by promises of quick wealth or opportunities to buy stocks at bargain basement prices with the promise of spectacular returns.”

There are many forms of investment scams, but they all share a common goal: to deceive investors out of their money. Brenman further cautions that investment scams often impersonate legitimate organizations, including government and financial institutions, to obtain sensitive information, steal money, or convince people to invest. The takeaway? “If it seems too good to be true, it probably is. High returns are often accompanied by high risk. You should be wary when you are promised otherwise,” advises Brenman.

The high cost of misplaced trust

Newport’s Portfolio Managers will never use pressure tactics or rush you. “As portfolio managers, it is our fiduciary duty to ensure that our clients fully understand their investments. We prioritize transparency and education, guiding them through every decision,” notes Managing Director and Portfolio Manager Jordan Schwann. “If you feel you are being coerced to make a quick financial investment decision with your hard-earned money, you should proceed with caution and verify all the facts before taking action.”

Financial fraud impacts countless Canadians annually, with scammers continuously refining their methods. While reported less frequently than other types of fraud, scams account for the largest financial losses in Canada. According to the Canadian Anti-Fraud Centre (CAFC), Canadians lost $567 million to investment fraud in 2023, a significant rise of 84% from 2022. These scams often involve high-pressure tactics and fake endorsements to rush victims into decisions without proper verification.

“First and foremost, be skeptical,” says Brenman. “Remember that company credentials can be replicated. If in doubt as to the legitimacy of an offer, contact the company directly. Your due diligence should include speaking with senior company representatives directly.”

Protecting yourself from fraud

Financial services are highly regulated, specifically structured to protect consumers and the public at large from fraud. Restrictions about how financial advice can be offered or acted upon have strict guidelines.

“Every financial institution is monitored to ensure that they are acting in their clients’ best interests,” notes Brenman. “It’s why Newport never uses social or messaging channels to offer financial advice or transact business. If you’re approached by someone you don’t know—especially via a digital channel such as a text message, WhatsApp invitation, or unknown email—don’t click, no matter how enticing the offer may be.”

Brenman offers these additional tips to ensure you’re protecting yourself from undue risk:

• Be vigilant: Monitor your online activities and those of your family members and ensure you only share essential information online with people and companies you know and trust. Be mindful of your digital footprint.
• Consider the source: Approach unsolicited advice with caution. Research thoroughly—do your own due diligence and avoid clicking on unknown links or providing personal information.
• Solicit the advice of your trusted advisors: Share any suspicious communications with your financial advisor, accountant or lawyer.
• Pause and reflect: The promise to backstop losses or the promise of guaranteed results should also be considered red flags when assessing the validity of any opportunity.

For more information and resources on protecting yourself from investment scams, visit the Canadian Anti-Fraud Centre’s website.

If you’re seeking personalized financial advice and want to learn more about safeguarding your investments, contact Newport Private Wealth directly through our secure channels. Stay informed, stay vigilant, and protect your wealth.