Two years ago, many of us had never heard of either Bernie Madoff or the phrase "Ponzi scheme." Now, we are all much more wary about investment fraud.
What are some of the signs that should set off the alarm bells in our minds? How can you tell how safe your investment is with a particular investment firm or finance professional?
Ask Tom Collimore, director of investor education at the Chartered Financial Analysts Institute. He'll be online at noon (ET) on Tuesday to take your questions. To send in a question, click here.
Tom Collimore, CFA Institute
Prior to joining the CFA Institute, Mr. Collimore served as managing director, investor relations, for CIFG Holding, a group of bond insurance companies based in Bermuda, Paris and New York. In past positions, Mr. Collimore managed asset-backed investor marketing for Enhance Financial Services Group (now Radian Group) and private asset-backed sales for Société Générale.
Earlier in his career, he marketed banking services and managed portfolios of financial institution loans and real estate credits for several North American banks, including Canadian Imperial Bank of Commerce and predecessors of J.P. Morgan Chase. Mr. Collimore previously served as adjunct professor of finance at the College of Insurance, now part of St. John's University School of Risk Management. He also worked as a high school teacher of mathematics.
Mr. Collimore holds a Master’s in Business Administration, with a finance concentration, from New York University’s Stern School of Business and a Bachelor’s in Foreign Service, with a concentration in international finance and commerce, from Georgetown University. He holds a Chartered Financial Analyst (CFA) designation.
Sonali Verma, Globe Investor: Hello, everyone, thanks for joining us. Before we get started, I just want to remind you to refresh your screen periodically to follow the discussion.
Let's get started.
Peter Boyce writes: Good morning Mr. Collimore! How does the average investor/individual identify the fraudster who attempts to "lure in" his victims by hosting "free investment seminars" in small settings/towns. Perhaps a lowkey seminar at the local library, church, etc., where virtually nobody is going to question his "credentials". Thank you!
Tom Collimore: Thank you, Mr. Boyce.
This speaks to the issue of background checks. Investors need to go to all relevant regulators including provincial securities commissions, IIROC and MFDA if applicable.
Overall, consider using the mosaic approach to vetting all your investment opportunities—does overall picture make sense. Be careful not to be swayed by apparent trappings of success.
Sonali Verma: Thanks for that. Peter, the Investor Education Fund has a pretty good checklist that you ought to take a look at as well -- it's on Globe Investor's Investor Education section.
John Soutsos writes: How can we be sure if our financial planner is not a crook? Is it safe to have your entire portfolio with one firm?
Tom Collimore: As I mentioned in my response to the previous question, it is important for investors to do their due diligence. As advisors must adhere to Know Your Client rules, clients must also do everything possible to check the background of an advisor with whom they are considering doing business. This can be done via the provincial securities commissions, IIROC and the MFDA (if applicable).
Per your second question, I recommend more focus on the qualifications of the advisor and the firm’s performance and quality than on the number of advisors you employ.
Sonali Verma: Also, Rob Carrick has done a few good Let's Talk Investing videos on the topic of finding a financial adviser. Here are a couple that you might enjoy:
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