BBB Chief Exective Jim WinsettQ. I would really like to be more hands on with my investments, but I think doing so would be risky. Does the BBB have any tips to offer on best investing practices?
A. Investments take risk; sometimes a little, sometimes a lot. But smart investors know that the best way to minimize risk is to educate yourself about your basic rights, the protections you are entitled to under the law, and the common scams and frauds to avoid. Better Business Bureau has teamed up with the FINRA Investor Education Foundation to bring you up-to-date research and tools on investment fraud at BBB Smart Investing: http://www.bbb.org/smart-investing/.
Studies have shown that investment scams have risen in the last decade. Baby Boomers are managing their own retirement funds and are particularly vulnerable. Sadly, in our marketplace we have documented two Ponzi schemes in the past few years. In 2011, according to the North American Securities Administrators Association (NASAA), state and provincial regulators in the U.S., Canada and Mexico launched more than 2,600 administrative, civil and criminal enforcement actions involving investors, one in five of whom were seniors.
The Financial Industry Regulatory Authority (FINRA) suggests four key steps to take before investing:
• Check out the seller. A legitimate investment professional must be licensed. Before giving out your personal information, ask whether the seller is registered with FINRA, the Securities and Exchange Commission (SEC) or your state securities regulator. Find registration and other information on individual brokers, securities firms and investment advisor firms at: www.SaveAndInvest.org/CheckSeller.