We know that researching the background and qualifications of a person selling you an investment may seem to be time-consuming or even overwhelming," says Lorinda Brinton. "We would all like to find that great opportunity that guarantees financial security with no risk, but unfortunately some offers are just too good to be true."
In the time it takes you to read this headline, you could have checked to see if your investment adviser or firm is registered.
Don't think that you need to be worried about who's taking care of your money? You might be interested to know that 27 per cent of Canadians believe they have been approached with a possible fraudulent investment1. Even if you don't consider yourself an active investor, make sure you know what to do so you're prepared if you're suddenly pitched the "next greatest thing."
Here are three tips, and tools to get you started:
Do your homework
Many people spend more time delving into the details of their Internet and TV subscriptions than they do an investment that could potentially affect their quality of life in retirement. A few moments spent now researching a potential investment opportunity could provide greater returns than any other investment you'll ever make.
The Canadian Securities Administrators (CSA) and local regulators offer several free educational tools and resources for investors on their websites, including how to check the background of an individual or firm, what to ask when choosing a financial adviser, and how to maintain a successful working relationship with an adviser.
To begin, visit the Canadian Securities Administrators online at www.securities-administrators.ca or www.autorites-valeurs-mobilieres.ca.
Check registration
Did you know that all securities industry professionals are required to register with the securities regulator in each province or territory where they conduct business? And yet 60 per cent of Canadians with a financial adviser do not conduct due diligence on the background of their adviser in any way, including taking the critical step of checking registration.
The National Registration Search tool, available at www.aretheyregistered.ca and www.sontilsinscrits.ca can help you determine if the person or company offering you an investment is registered to do so (Canadian securities regulators will only register those that meet specific qualifications and standards). You can also call your local securities commission to verify registration.
Report a scam
If you come across an individual or firm that has offered you or others you know an unregistered investment opportunity, or if you believe you have been a victim of investment fraud, it is important to contact your local securities commission. When surveyed, only 33 per cent of Canadians who were approached with a fraudulent opportunity say they reported it to authorities.
Many people are hesitant to come forward as they are embarrassed or feel ashamed of what has happened – while this is understandable, investment fraud can happen to anyone, and reporting even the suspicion of a potential fraud could help prevent others from becoming victims.
March 19, 2014, is Check Registration Day, so why not take the opportunity to help prevent investment fraud – check to see if an individual or company that has offered you an investment is registered to do so. Taking some time now will help you be a more informed and proactive investor and better protect yourself, your family and your retirement.
Canadian Securities Administrators
Securities regulators from each province and territory have teamed up to form the Canadian Securities Administrators, or CSA for short. The CSA is primarily responsible for developing a harmonized approach to securities regulation across the country.