Fraud Prevention Month: 4 steps you can take to safeguard your money from investment scams

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March is Fraud Prevention Month, a national spotlight that seeks to help Canadians recognize, avoid and report fraud. One of the growing and most insidious forms of fraud are investment scams, where fraudsters prey on those looking for worthwhile opportunities or just the answer to challenging financial circumstances. According to data from the Canadian Anti-Fraud Centre, the amount of money reported lost to investment scams has multiplied nearly 20 times from 2019 to 2023.

Fraudsters work hard to repurpose their investment scams and leverage connections they can make online and in person. While it may be hard to know and remember the latest investment scams, there are some great resources and tools provided by the Alberta Securities Commission (ASC) to help you better safeguard your hard-earned money.

Consult the ASC’s Investment Caution List

To help inform and protect investors, the ASC created the Investment Caution List. This list outlines companies and individuals that the ASC has identified as appearing to be engaging in activities that either require registration under Alberta securities laws or may be investment scams. It is worthwhile to check this frequently updated list before working with any individual or firm to ensure that they are not present on the list.

Subscribe to the ASC’s Investor Alerts

Investors wanting to stay ahead of emerging fraud trends and market misconduct can also subscribe to the ASC’s Investor Alerts, which are delivered directly to their inboxes. These alerts provide investors with up-to-date information on unregistered individuals and firms violating Alberta and/or Canadian securities law. ASC’s Investor Alerts also help warn the public of common fraud tactics.

Strengthen your investment literacy with CheckFirst.ca

Whether you’ve just started investing or have been on your investment journey for years, the ASC’s investor education website CheckFirst.ca provides a wealth of important information. You can find resources and tools to help you invest suitably for yourself, recognize the red flags of fraud and conduct registration checks on individuals or firms you plan to work with.

Building your knowledge is an ongoing effort, which is why the ASC shares a new CheckFirst article each month covering an investing concept, misconceptions about investing, investment fraud trends and frequently asked questions. Even better, you can subscribe to the CheckFirst newsletter for the latest articles, investor alerts and upcoming investor education programs in the community.

Explore the ASC’s 31 Days of Investment Fraud throughout March

common investment scamsIn recognition of Fraud Prevention Month, the ASC recently started sharing its new 31 Days of Investment Fraud resources. Every day of the month, the ASC will highlight a common investment fraud scam or red flag and detail how Albertans can safeguard their money.

Alongside this information, found on CheckFirst.ca/Fraud_Prevention, visitors can test their knowledge with the Don’t be fooled by fraud quiz and download or print the complete 31 Common Investment Scams and Red Flags infographic. This infographic gives investors a comprehensive list of what to look out for when it comes to investment scams and how to best avoid them.

Throughout March 2024, visitors who explore the page and subscribe to the CheckFirst newsletter will also be entered in a draw to win one of three pre-paid MasterCards worth $150.

Building your investor knowledge and leveraging the free tools and resources provided by the Alberta Securities Commission can be a strong combination to protect yourself. Remember, if you are suspicious about an investment you were offered or believe you or someone you care for was a victim of an investment scam, contact the Alberta Securities Commission. You can contact the ASC public inquiries at 1-877-355-4488 or email inquiries@asc.ca.

Romance Scams: Protect yourself from online investment fraud

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The new love interest you have been texting over the last few months – the one you met on social media – has had to cancel your online video date due to a work emergency. You’re disappointed because this is a recurring pattern. But, you push aside your feelings of frustration. After all, this person has been helping you learn how to invest and take control of your finances. They’ve even shared an investment opportunity with you that they claim earned them incredible returns in the past. You think to yourself, “If people can find their significant other online, maybe this could work out for me too. And the returns on investments, that’s a nice added benefit.”

Stop. Check first. This could be the start of an online romance investment scam.

According to the Canadian Anti-Fraud Centre (CAFC), romance scams were responsible for some of the highest financial fraud losses in 2023 — costing 945 victims more than $50 million.

 

What is a romance scam?

romance scam phone

Romance scams often involve social engineering tactics. Here a fraudster quickly builds an online relationship with the target, and then leverages the trust formed and any personal information they obtain to con the victim out of money.

Regardless of the platform where the scam originates, fraudsters follow similar patterns of trust-building through regular communication and declarations of love or friendship. Then comes the requests for money for an investment opportunity. Oftentimes, these investment offers can be tied to crypto or promises of significant returns with little or no risk.As millions of Canadians continue to use social media and dating apps to seek new friendships and romance, these types of investment scams are becoming increasingly common.

Here are some tactics and schemes that you should be on the lookout for:

Fake profiles and catfishing

Catfishing, or using fake online identities, has long been a tactic used by fraudsters. These scams usually involve an attractive, but fake profile, designed to entice victims into an online relationship.

Con artists even use new technology like AI to manipulate images, videos, and voice to create a seemingly credible persona. Catfishing scams typically feature a profile that seems unrealistically perfect, like excessive wealth and good looks, an extravagant lifestyle and unfettered success.

One of the ways you can spot if the images on a profile are AI-generated is by looking for unrealistic symmetry in a person’s face or magazine-like beauty. A reverse image search can also help check if a picture is stolen or used by multiple accounts.

Military or oil rig scams

This scam is a variation of catfishing. It targets Albertans by exploiting their trust in established institutions or companies, like the military or an oil company.

Scammers take advantage of the victim’s lack of knowledge about protocol for military personnel or oil rig workers when crafting these scams. Fraudsters typically claim to be dealing with a banking issue due to being deployed overseas. They request help with finances for an investment opportunity that will result in quick and guaranteed returns for both of them.

Frequent excuses like avoiding video chats due to security or network problems at their remote work location is a common red flag.

Financial grooming or pig butchering

Unlike many romance scams that develop rapidly, financial grooming is often a long term and predatory scheme. This scam, often referred to as “pig butchering”, usually combines elements of a romance scam and crypto investment fraud.

In this tactic, the fraudster grooms the victim over months before encouraging them to start crypto trading. They may even offer to “manage” the crypto investment on behalf of the victim and request additional funds to be provided for a greater return.

Scammers often create fake return statements on investments to establish credibility. They may even pay early but fake returns —  prompting the victim to invest larger and larger sums of money. In most cases, victims only realize they have been defrauded when they try to withdraw their funds and are denied or ignored by the fraudster.

 

How do you know if you’re being scammed?

Typically, a romance scammer will try to move the relationship forward as quickly as possible. They employ a technique called “love bombing”, where they shower victims with extreme displays of attention and affection. The con artist may also try to establish trust by sharing “personal” details about their lives right at the beginning of a conversation.

The next step in their con is the suggestion to move your conversation to personal messaging apps. Scammers use apps like Google Chat, Snapchat, and Telegram to prevent their dating profiles from being reported.

Common red flags of a romance-based investment scam are:

  • A new acquaintance you met online who claims to have insider knowledge about profitable investment opportunities.
  • Directions from an online friend or acquaintance to use a specific app or platform to make investments.
  • Pressure to invest immediately or lose out on a once-in-a-lifetime opportunity.
  • Requests for remote access to your device to “teach” you how to invest.
  • Immediate and escalating interest in your finances.

 

Reporting a romance scam:

Fraud costs Canadians millions of dollars each year. Despite the staggering impact of these scams, we know that fraud is grossly underreported as only 5-10 per cent of victims file complaints.

Remember, regardless of age, investment knowledge, or level of wealth, anyone can fall victim to an investment scam. If you believe you have been the victim of a romance-based investment scam, report it to the Alberta Securities Commission (ASC). You can register a complaint online or call us at 403.355.3888.

Want to learn more about the tactics employed by fraudsters? Check out our Fraudster’s playbook resource

 

Top 3 crypto scams of 2024: Protect yourself from social media, romance and recovery room scams

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2023 was a year that saw the crypto industry marred by controversy. Beginning with the collapse of FTX to the more recent money laundering charges against Binance’s Changpeng “CZ” Zhao, there have been many scandals and frauds plaguing the industry.

As we move into 2024, crypto scams continue to be a pressing issue worldwide, including in Canada.

The Alberta Securities Commission recently released the top crypto-related scams to watch out for in 2024. This list is based on investor complaints, ongoing investigations and current enforcement trends.

Let’s take an in-depth look at the top three scam variations that made the list and break down the tactics fraudsters use to target everyday Albertans.

Social media deepfakes and celebrity endorsements:

The explosion of Artificial Intelligence (AI) tools, like AI-generated images and voices, have made it easier for fraudsters to bait Canadians with crypto scams.

In November 2023, the Canadian Security Intelligence Service (CSIS) reported the growing economic and financial threats from artificially generated fake visuals known as deepfakes. It highlighted rising cases of fraudulent deepfake videos and images featuring well-known individuals — including that of Canadian Prime Minister Justin Trudeau, popular business icon Elon Musk and actor Tom Hanks — used in social media promotions to lure Canadians.

Celebrity endorsements, genuine or not, may seem enticing. Regardless of how convincing they look or sound, actors, models, athletes, politicians or entrepreneurs are not reliable or qualified sources of financial advice. Remember that endorsements are never a guarantee of legitimacy or investment returns.

Whether an advertisement uses a celebrity endorsement or not, promises of high returns, risk-free investing or free money are significant red flags of fraud. Always check first — anyone offering investment products or financial advice must be registered with the Alberta Securities Commission or another provincial securities commission.

Romance scams:

After the COVID-19 pandemic, dating app fraud, romance scams, and “pig butchering” have become commonplace and a topic in our social media conversations. The Canadian Anti-Fraud Centre (CAFC) observed that, despite only five to 10 per cent of such frauds typically being reported, there has been a significant uptick in romance-based investment scams in recent years. The agency received more than 650 reports of such scams between January and September 2023, with total losses estimated at upwards of $29.8 million. Closer home in Alberta, there were 70 reports of romance scams and losses exceeding $2.6 million.

While these scams are often thought of as only targeting those looking for romance, this is an oversimplification of this tactic. Fraudsters take advantage of vulnerable people looking for friendship or love to connect with potential victims. Once a relationship is established, they exploit the trust and attachment created to request money or fabricate investment opportunities, often related to crypto.

Signs of a romance or dating scam include an internet stranger expressing love or affection too soon. They may then avoid meeting in person or on video calls, and eventually ask for money, crypto or offer a crypto investment that they can invest in on your behalf. Always be cautious of new friends or acquaintances that take an immediate interest in your finances or offer investment advice.

Recovery room scams:

As interest in crypto continues to soar, fraudsters are increasingly deploying what’s called “recovery room” scams to further defraud victims.

In this type of fraud, con artists impersonate regulators, recovery agencies or law enforcement and attempt to defraud victims again under the pretext of recovering their lost crypto assets or funds for a fee. To make it more convincing, fraudster’s target these recent victims using information from the original scam.

Stay alert for red flags like fee requests and demands for banking or personal details. Neither law enforcement agencies nor the Alberta Securities Commission will ever contact you with an offer to recover your money or assets for a fee. Any unprompted communication offering to do so should raise suspicions.

Remember — recovering crypto is extremely difficult and is a long and arduous process with no guarantees. If it sounds too good to be true, it probably is.

Protect yourself:

Being aware of the red flags of fraud is crucial in an investor’s journey. There are also additional steps investors can take to protect themselves and help others:

Check registration. Albertans should ensure that any company or individual they plan to invest with is registered with the Alberta Securities Commission. You can complete your checks by consulting the Canadian Securities Administrators National Registration Search.

Stay alert. Research any opportunity thoroughly before you invest. To help, the Alberta Securities Commission maintains an Investment Caution List that includes the names of companies that are not registered with the ASC and appear to be engaging in activities that either require registration under Alberta securities laws or may be investment scams.

Know where to turn. If you suspect you or someone you know has lost money to a crypto investment scam, file a complaint with the Alberta Securities Commission via email complaints@asc.ca or call us at 403-355-3888.

Taking time to further understand common crypto scams can help you recognize, avoid and report them. Visit the crypto scams page for more information.

How to recognize the red flags of an unsolicited investment offer

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Criminals frequently use digital channels to deploy investment scams that rob Canadians of their hard-earned money every year. According to a survey by the Canadian Anti-Fraud Centre, Canadians lost more than $161.4 million to investment scams in just the first six months of 2023. While these losses are expected to surpass 2022’s total of $305.4 million, the CAFC estimates that only 5-10 per cent of frauds are reported.

One reason so many Canadians fall victim to scams is social engineering. Many times, investment scams start with an unsolicited message designed to deceive: a well-crafted introduction to build trust with the potential victim and set the stage for a “money-making opportunity”.

Some versions of these scams — such as the infamous lottery ticket or Nigerian prince schemes — have existed for decades. However, these swindles have evolved considerably over the last few years. Fraudsters are increasingly leveraging growing interest in online trading, cryptocurrency investing, and social media popularity to target Canadians.

How fraudsters use unsolicited messages to initiate a scam

A random direct message on social media or text serves as the modern equivalent of an unsolicited cold call. Messages often begin simply, like “Hi” or a more personalized greeting such as “Hey, are we still on for coffee?” This could be a fraudster trying to start a conversation.

Fraudsters who use this technique quickly build a rapport by striking up a conversation and making the victim feel like they’ve found a real friend. Scam artists will frequently use publicly available personal details, and the victim’s hobbies and interests from social media, to boost credibility and tailor their scam during this stage. Once trust is established, the scammer will introduce a supposedly lucrative investment opportunity that has earned them large returns, enticing the victim to invest as well.

In a 2023 global study by the Global Anti-Scam Alliance, 34 per cent of victims reported being “attracted to the offer made” as the primary reason for falling victim to a scam.

Signs an unsolicited investment opportunity may be a scam

One of the typical red flags of an investment scam is when a person makes claims about unrealistic returns with little to no risk. A seasoned investor or registered investment advisor will tell you that every investment comes with some degree of risk. The higher the potential return, the higher the degree of risk you may lose most, if not all, of your investment. This holds true, especially with alternative high-risk investments such as crypto.

Scammers also employ tactics of impersonation. A recent Interac survey showed that fraudsters pretended to be representatives of legitimate organizations, including government institutions and securities regulators, to deploy fake banking, credit card, and investment scams. Any unprompted communication that lacks background information about the representative or business should be considered a red flag of potential scam. Remember, requests for personal data in such communications are also a warning sign.

Fraudsters frequently use social media platforms, dating sites, messaging apps like WhatsApp, Kik, Signal and Telegram (which allow users to interact with anyone else using the app), and services like Google Chat for correspondence. These platforms allow scammers to quickly delete their profiles once a scam is complete, thereby hiding their identities.

How can you avoid unsolicited investment offers from turning into a scam?

Taking the time to check the fundamentals of any investment opportunity is crucial. Some other steps you can take to protect yourself and your money from investment scams are:

  • Be wary of any investment advice that you did not seek out yourself. Legitimate registered investment professionals and businesses generally do not conduct outreach via social media or text messages.  
  • Ignore investment offers that use words like ‘proven’ or ‘guaranteed’ investment returns. If it sounds too good to be true, it usually is.  
  • Avoid any unsolicited crypto investment opportunities offered online or through unknown individuals. Fraudsters often tailor their scams around crypto or fake trading platforms.   
  • Be cautious of unexpected investment offers that come from friends or acquaintances on social media. Fraudsters can hack or create fake accounts that impersonate those you know. 
  • Limit the personal information you share publicly on social media platforms. Fraudsters often tailor scams based on publicly available details about their targets. 
  • Stay cautious of individuals pushing ‘time-limited’ opportunities. These types of offers are meant to create a sense of urgency to prevent you from researching the investment and the person or firm offering it.  
  • Commonly, fraudsters will direct potential victims to cloned websites by mimicking trusted brands. Remember, spoof websites or phishing ads can open you up to fraud risk. Always check the destination URL of an advertisement or website, and be wary of clicking links in unsolicited messages. Better yet, if you are looking for information, go directly to a company’s official website. 
  • Always check to ensure the individual, firm or trading platform you plan to work with is registered with the Alberta Securities Commission before investing. Generally anyone offering investments should be registered with the ASC.

While unexpected investment opportunities can seem enticing, falling victim to fraud can have long-lasting financial and emotional impacts. Educating yourself about common scam tactics and staying vigilant is the best defence against losing your hard-earned money. 

Four steps to building financial resiliency into your investing journey

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For many new and experienced investors, it can be challenging to invest and work to achieve financial goals while managing the rising costs of daily life. However, developing certain behaviours and processes in relation to your money can help you stay on track as well as build your financial resiliency. These steps hopefully mitigate stress and help you weather the storm of rising costs.

November is Financial Literacy Month, a time when Canadians are reminded to strengthen their financial knowledge and resilience. The following four steps can help you become more financially resilient.

  1. Practice financial self-awareness
    When times are tough, ignoring your financial situation and maintaining your current spending habits can be comforting. However, this feeling of comfort may be short-lived though, as uncertainty can become a source of anxiety. Instead, practice financial self-awareness by staying mindful and fully engaged with your finances. By assessing your income, expenses, savings, investments and debts, you can better understand where you can cost-cut, which debts to pay off sooner, and how to rebalance your spending towards necessities and long-term goals.
  2. Recognize what you can and can’t control
    It is critical that you recognize that certain factors – such as interest rates or a possible economic recession – are beyond your control. However, building a plan that factors in worst-case scenarios can help make you feel empowered when times are unpredictable. For instance, if you’re worried about the market heading for a recession, consider the time horizon of your investment goals and if you are well-diversified to reduce the risk you are taking on. If you need more assistance with your financial planning or reviewing your investment portfolio, a certified financial planner or registered investment advisor can help you better plan for the future.
  3. Create and maintain an emergency fund
    An emergency fund is a savings account dedicated to helping you cover life’s unforeseen costs without having to draw from high-interest debt options such as credit cards or selling your investments early. One of the best ways to establish an emergency fund is to start small, setting aside a small portion of every paycheck into a savings or high-interest savings account. Over time you can automate them through your bank or credit union, or even increase your contributions as your budget allows. Creating an emergency fund equivalent to three to six months of your typical expenses can provide you with peace of mind that you can sufficiently cover most emergency costs.
  4. Prioritize paying down consumer debt
    Consumer debt, such as credit cards and the negative compound interest they generate, can limit the money you have available for day-to-day life as well as your ability to save and invest. Only paying the required minimum on your credit card will help you avoid additional late fees, but will only pay off a fraction of the principal loan. Worse, ignoring your debt can compound the interest. For example, if you did not make any payments on a credit card with an interest rate of 24.99 per cent (the annual percentage calculated daily and charged on any balances carried from month to month), the amount you owed would double after just four years. Paying down your debt frees up your future earnings so you can use them elsewhere.

Building financial resilience takes time and conscious effort, but developing healthy habits now can pay off for years to come. This November, take small steps – track your spending, start an emergency fund and/or make a plan to pay down debt.

Three tips to becoming a better investor this fall

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October marks Investor Education Month, a time when Canadians are reminded to strengthen their investment literacy. Whether you are a new or experienced investor, refreshing yourself with our top tips and the fundamentals of wise investing can help you avoid poor performance, common mistakes and fraud.

  1. Consider where you are getting your investing advice
    Investors today are inundated with news, speculation and excitement across traditional, social and digital channels on what to invest in or how to invest. Before putting your money into any recommended investment or changing your current investing approach, consider the qualifications and knowledge of those providing the recommendations. One of the greatest things you can do as an investor is to stay focused on your investing plan. Use diligent research into the fundamentals of the company you are planning to invest in, including its profitability, debt obligations and return on equity. Understanding the fundamentals and relying on information from qualified experts using publicly available data can help you make a more informed decision and avoid fraud.
  2. Pay yourself first
    Investing consistently over time, regardless of whether the share price of an investment is up or down, is one of the best ways to reduce your average cost per share over time. Avoid the costly mistake of trying to time the market or not investing at all. Automating your contributions to your investment accounts is an easy way to remove the decision of when to invest and turn investing into an ongoing and sustainable habit. Some trading platforms may even allow you to set rules for automatically purchasing investments once your contributions reach your accounts.
  3. Reinvest your dividends
    Some single stocks and investment funds offer dividends to their shareholders. Dividends are a share of a company’s profits paid to shareholders either monthly, quarterly or annually based on the number of shares they hold. Investors wanting to maximize the compounding effect of their investments can apply for a dividend reinvestment plan (DRIP) with the financial institution, firm or trading platform they use, for any dividend-producing investments in their portfolio. With a DRIP in place, any dividends received from an investment equal to or greater than the investment’s share price will automatically purchase more shares for you at no extra cost. This reduces the cost of placing trades and further compounds your investment earnings over time.

Improving your investment knowledge on an ongoing basis can play a significant part in helping you reach your financial goals and avoid fraudulent investment scams. Check our Fraudster’s playbook to learn more about avoiding fraudulent investment scams.

Artificial intelligence: What to consider before using it for investing

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Artificial intelligence (AI) has gained significant traction across various industries, including financial markets, promising increased efficiency and data analyzation. AI has also found a prominent role in our day-to-day lives, being used to enhance search engines capabilities and in AI-enhanced chat bots that deliver answers to questions or requests based on data sets that they are trained on.

With the growing interest in AI, some investors are looking to AI’s evolving technology for investing guidance. Before you use AI tools for investing, it’s important to understand its limitations.

Here are some things every investor should consider before investing with the help of AI:

AI is not a replacement for researching investments

While AI is a ground breaking technology, it does not replace the critical step of researching and qualifying an investment. AI chatbots like ChatGPT, OpenAI and Chatsonic are classified as large language models (LLM). This means they process vast amounts of select data sets from the internet and provide a response to your query based on probably word and phrase associations.

LLM AI relies heavily on historical data and may not provide real-time financial and investment analysis or guidance. Understanding past performance can be helpful information but it is never a guarantee of future performance.

Investors should take the time to thoroughly review the company they plan to invest in including the latest information and fundamentals like their business plan, operational information and milestones.

 

AI lacks human intelligence or the experience of registered investment professionals

Everyone has a unique investing journey. Constructing your investment portfolio comprises understanding your financial goals, time horizon and your risk tolerance. AI investing bots lack the emotional intelligence and human intuition to factor these important elements into their recommendations when asked.

Based on how the AI chatbot was coded and the types of data sets it was trained on to source answers, biases could also be present in its responses, favouring a particular approach or recommending only a limited number of investments to inquiring investors. Investors should look to registered financial advisors to receive a comprehensive and personalized assessment, and investment services when needed.

 

Be wary of AI chatbots that direct you to invest on a specific platform

With the growing excitement around the technology, fraudsters promote AI investing bots and apps they say can provide guaranteed or high returns with little to no risk to investors. Be mindful that these types of advertisements are a common red flag of fraud.

One of the best ways to avoid fraud is to confirm that the trading platform you plan to use is registered with the securities regulator in the province or territory you reside. Registration confirms that the individual or firm is properly qualified and comply with investor protection laws.

You can check the registration of any individual, firm or trading platform on our Check registration page.

Advancements in AI has undoubtedly transformed how we obtain, analyze and use information. While AI can provide helpful investment ideas, when it comes to making investment decisions, there is no replacement for the qualified services of registered investment professionals and your thorough research of investments to ensure they align to your goals and risk tolerance.

Treat using AI for investing as a helpful tool but not a substitute for due diligence.

Know your limit and invest within it: Understanding your risk tolerance when investing

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Understanding the level of risk you are willing and able to take with your investments is critical to your success as an investor. All investments come with some degree of risk; the higher the potential return of the investment, the higher the risk that you may lose some or all of your money. Understanding your personal risk tolerance and factoring it into your investment decisions can help you make suitable investments.

How can I determine my risk tolerance?

Risk tolerance is a measure of your ability and willingness to take risks with your money, with the understanding that the performance of your investments may not achieve the expected results. Whether you started investing in your 20s or nearing retirement, everyone has a different risk tolerance that gradually changes over time as they enter new life stages. Your personal preferences also change as you approach your financial goals.

When working with a registered financial advisor or a robo-advisor, a Know Your Client (KYC) form must be filled out before you begin investing. KYC forms play an important part in your investing journey by aiding financial advisors and robo-advisor services to better understand your risk appetite and the suitability of recommended investments. If you are planning to do self-directed investing, it is essential to personally assess your risk tolerance before starting. One tool that is available to help you is the Check Your Risk Tolerance quiz.

Tips to keep your investment portfolio in check with your risk tolerance

Whether you are a new or experienced investor, continually paying attention to and considering your risk tolerance is essential for long-term investing success.

1) Reassess your risk tolerance annually: Your life changes over time and so does the level of risk you want to be exposed to. Consider filling out a new KYC form with your advisor, retaking the CheckFirst quiz every year, or if you reach a new life stage, like getting married or nearing retirement.

2) Be honest with yourself: Investing is a personal journey and requires you to be open and honest with yourself and the investment professionals you work with on the level of risk you are willing to take. For instance, consider if you were to see a hypothetical 50% drop in your investment portfolio value. Reflect on your emotional and financial state if that were to happen and from this place, you will be able to more accurately answer KYC forms and thoughtfully consider high risk investments.

3) Think about your goals: The length of time you expect to hold your investments before withdrawing funds can be an important factor in determining the level of risk you take. Generally, the longer your time horizon, the more risk you can take, as you will have more time to recover if your investment underperforms for a period. The shorter the timeframe, the less risk you may want to take to preserve what you have invested.

4) Adjust your portfolio if it no longer falls within your risk tolerance: As your risk tolerance changes over time, your investments should re-align with it. If you are working with an advisor they can help adjust your portfolio to better represent your risk level. If you are investing on your own, consider how you can slowly adjust the level of risk within your portfolio by using appropriate risk-aligned investments.

Investing without considering your risk tolerance can lead to poor performance and ill-suited investments for your financial goals. By assessing your risk appetite throughout your investing journey, you can confidently build a portfolio to best meet your financial goals and comfort level.

Thinking ahead: Understanding the benefits of using a certified financial planner

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For new and experienced investors, your financial plan is one of the most important elements of your investing journey. A financial plan is a document that outlines your current financial circumstances, your short, medium and long-term goals and the steps you will take to accomplish them. A financial plan can also help you plan for and manage risks, including health or disability needs, job loss, and debt repayment.

Thoroughly evaluating your income, expenditures, savings, and debts and mapping out your expectations for the future is essential to constructing a comprehensive and realistic financial plan. While creating a financial plan can be done on your own, many seek out the expertise of a certified financial planner.

A certified financial planner has a thorough knowledge of personal finances and can help clients of all ages develop a plan to reach their goals and maximize the efficiency of their assets.

Let’s explore common scenarios where using the services of a certified financial planner might be right for you.

Not knowing where to start

Drafting your financial plan can feel daunting, and relying on a trusted fiduciary (someone obligated to work in your best interest), like a financial planner, can help you get started. Financial planners are trained to develop a diversified and suitable investment portfolio; provide retirement, estate and tax planning services, and insurance and debt management recommendations. Financial planners can get you started on the right foot by helping you better understand where you are currently and the optimal way to get to your financial goals while outlining additional factors in your planning you may not have considered.

Dealing with significant life events

Earning a promotion at work, getting married or divorced, and receiving an unexpected inheritance from a loved one are significant life events which can impact your finances and future goals. A financial planner can help you assess the changes in your life and begin charting out a plan of action that allows you to best meet your financial goals under your new personal and financial circumstances.

Preparing for retirement

Saving for retirement is an important goal for many Canadians. Knowing approximately how much you and your spouse will need in 10-20-30 years can be challenging to determine and even more so if you plan to retire early or with a desired retirement income. Financial planners can take a detailed account of your assets, including real estate, investments, debts, savings, work pensions and access to government benefits like the Canadian Pension Plan, Old Age Security, and the Guaranteed Income Supplement to formulate a comprehensive financial plan which includes recommended withdrawal limits during retirement to ensure your nest egg lasts through your golden years.

Having a sound financial plan can play a big part in helping you reach your goals. Whether you want to focus on a specific area of your life, like investment planning or simply want a new perspective from someone with the knowledge, skills, expertise and ethical obligations, a financial planner can be a valuable partner in your financial planning journey.

To learn more about certified financial planners and how to find a financial planner for your needs, visit FP Canada.

Elder Financial Abuse – Recognize it and prevent it

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June 15 is World Elder Abuse Awareness Day and the Alberta Securities Commission (ASC) is encouraging Albertans to be aware of the signs of elder financial abuse.

Elder abuse can manifest in various forms, including physical, emotional, neglect, and financial mistreatment. In Canada, financial abuse is the most prevalent type, often occurring following a crisis, the loss of a loved one, or a decline in physical or mental health, when individuals may be feeling vulnerable and isolated. Unfortunately, identifying financial abuse can be challenging. Financial abuse is often a pattern, rather than a single event, and may happen over a long period of time. It involves the illegal or unauthorized use of someone else’s money or property, which can range from forceful acts like theft or fraud to more subtle forms of pressure or deception. Victims of financial abuse, particularly when it involves friends or family members, may be reluctant to acknowledge or report the abuse, resulting in the abuse going unidentified.

Recognizing Warning Signs of Elder Financial Abuse

Being aware of the warning signs can help loved ones identify potential cases of elder financial abuse. Some signs that a senior may be experiencing financial exploitation include:

  • Unusual financial activity that does not align with their capabilities, such as online banking despite being unfamiliar with computers or making frequent ATM withdrawals despite mobility limitations.
  • Sudden liquidation of investments without a reasonable explanation.
  • Difficulty in contacting the person responsible for managing their finances.
  • Abrupt changes in living arrangements without apparent cause.
  • Emergence of a new close relationship, including romantic involvement, or a sudden shift in emotions towards a person or group.
  • Overly keen interest or involvement in the senior’s financial matters by a friend, family member, or caregiver.
  • Unwillingness to discuss financial matters or an unusual preoccupation with winning lotteries or sweepstakes.

Ways Seniors can Safeguard Their Finances:

Seniors can take proactive steps to protect themselves from financial abuse and support their well-being:

  • Foster social connections: Develop a network of trusted friends and relatives with whom you can openly discuss relationships and financial matters. If you feel someone is intruding excessively, pressuring you, or seeking unwarranted access to your finances, seek support from your trusted network.
  • Stay informed: Thoroughly research investment opportunities or sales pitches before entrusting your money to anyone. Consider consulting a registered financial advisor if you require assistance in managing your finances.
  • Monitor investments: Review financial statements or reports regularly. In case of any unfamiliar account activity, don’t hesitate to ask questions and seek clarification.
  • Appoint a Trusted Contact Person: Consider appointing a Trusted Contact Person. A Trusted Contact Person is someone you’ve given your financial advisor or firm permission to contact should the advisor suspect financial abuse or detect signs of cognitive decline.
  • Be cautious about sharing personal information: Exercise caution when asked to provide copies of sensitive information like driver’s licenses, social insurance numbers, or credit card details. Understand why the information is necessary and how it will be used.
  • Don’t allow anyone to remotely access/control your computer or phone: Be vigilant about protecting your computer or mobile phone from remote access. Be wary of any person trying to persuade you to download a program for your computer or install an app on your phone.
  • Educate yourself about investment scams: visit our Types of investment scams page or reach out to the ASC for information on common investment scams and strategies to avoid them.
  • Understand affinity fraud risks: Even if a close friend or family member recommends an investment opportunity, conduct independent research and don’t succumb to pressure to make immediate decisions.

 

For help or more information on elder financial abuse visit albertaelderabuse.ca