In: Categories » Business » Ethics and presentation » Telltale Signs of Dishonest Brokers
|
Dishonest brokers often ask their victims a steady stream of questions designed to derail honest investors from asking the right questions. In contrast, honest brokers encourage you to ask questions, provide you with additional educa tional materials, and make certain that you understand the risks involved in your investment decision. And if you decide not to spend your money, they’re untroubled by your investment decision. The National Futures Association has collected 16 questions that are turn-offs for dishonest brokers (www.pueblo.gsa.gov/cic_text/money/swindles/ swindles.txt). In the following list, I’ve tailored those questions to meet the needs of online investors: Where did you get my name? The dishonest broker may answer, “from a select list of investors,” but your name was probably obtained from a Usenet newsgroup question that you asked, from a bulk email response, or from a mailing list subscription. What risks are involved in the investment? All investments except U.S. Treasury securities have some default risk. (U.S. Treasury securities are considered risk-free. The Federal government backs these securities just as it does the legal tender — that is, the money in your pocket. The gov ernment isn’t likely to fail, so the securities — and your money — are risk-free.) Some investments have more risk than others do. A salesperson who really has a sure thing won’t be on the telephone talking with you. Can you send me a written explanation of the investment, so I can consider it at my leisure? This question provides two turn-offs to dis honest brokers. First, swindlers are reluctant to put in writing anything that may become evidence in a fraud trial. Second, swindlers are impa tient; they want your money right now. Would you explain your investment proposal to my attorney, financial planner, investment advisor, or banker? You know the investment is a scam if the salesperson says something like, “Normally, I would be glad to, but . . .” or “Unfortunately, we don’t have enough time,” or “Can’t you make your own decisions?” Can you give me references and the names of your principal investors and officers? Swindlers often change their names so that you can’t check their histories. Make certain that the reference list contains the names of well-known banks and reputable brokerage firms that you can easily con tact. The Investor Protection Trust page (www.investorprotection.org) includes links to various resources that you can use to check out a broker or other financial professional. Which exchanges are the securities traded on? Can I have copies of the prospectus, the risk disclosure statement, or the audited financial statements? For legitimate, registered investments, these documents are normal. A legitimate investment may or may not be traded on an exchange. However, fraudulent investments never are. What regulatory agency is the investment subject to? Tell the broker that you want to check the investment’s good standing with its regula tory agency before going forward. The possibility of having to talk to a representative of a regulatory agency is a real turn-off to a swindler. How long has your company been in business, and what is your track record? Can I meet another representative of your firm? If the broker or the investment doesn’t seem to have a past, the deal may be a scam. Many swindlers have been running scams for years and aren’t anxious to talk about it. When and where can I meet you to further discuss this investment? As you might imagine, dishonest brokers often won’t take the time to meet with you, and they don’t want you in their places of business. Legitimate registered brokers are happy to sit down and discuss your financial goals. Where will my money be? What type of accounting can I expect? Often, funds for certain investments are required to stay in separate accounts at all times. Find out which accounting firm does the firm’s auditing and what type of external audits the firm is subject to. (Make certain that the well-known accounting firm is actually the auditor.) How much of my money will go to management fees, commissions, and similar expenses? Legitimate investments often have restrictions on the amount of management fees the firm can charge. Getting what the firm charges in writing is important. Compare the firm’s fees with charges for similar investments. How can I get my money if I want to liquidate my investment? You might discover that your potential investment can’t be sold or that sell ing your investment involves substantial costs. If you’re unable to get a solid answer in writing, the investment might be a scam. If a dispute arises, how will it be resolved? No one wants to go to court and sue. The investment should be subject to a regulatory agency’s guide lines so that disputes are resolved inexpensively through arbitration, mediation, or a reparation procedure. Is your broker dishonest or just incompetent? The state of Massachusetts provides a list of investment watchdog agencies at www.sec.state.ma.us/ sct/sctlink/linkidx.htm. You can also find the names, telephone num bers, and, when possible, the Web link to each state’s securities commission.
|
legal disclaimer
1) Our website is not responsible for the information contained by this article as well for any and all copyright infringements by authors and writers. E-articles is a free information resource. If you suspect this article for any copyright infringements, please read the Terms of service and contact us to investigate the problem.
2) The E-articles directory team is not responsible for inaccuracies, falsehoods, or any other types of misinformation this tutorial may contain and will not be liable for any loss or damage suffered by a user through the user's reliance on the information gained here. Please read the Terms of service
Useful tools and features
If you like this article (tutorial), please link to it from your web page using the information above. Linking to this page, this is the only way to help us improve our service, the same time providing your visitors with a way to improve their online experience.
related articles
Almost everyone agrees that too much time is wasted in meetings. It doesn’t have to be that way; that time can easily be cut in half. As a sales professional, if you are running the meeting, take advantage of the code of meeting ethics. If you are a meeting participant, suggest to the meeting facilitator that you persuade the group to agree to follow this code. Put it on display. People who have adopted just the time-allotted agenda and the timekeeper ideas are enthusiastic about the results in time sav...
2. Ethics of Educating Your Customers
If customers don’t understand a product, they won’t buy it. Customers become educated through experience. Make it your goal to educate your customers so they can better understand the products or services you offer. Of course, when they are more educated they become more sophisticated and are more likely to know better what they want or don’t want, what it will take to get it, and how much it should cost. They are also more likely to negotiate when they are educated, but this can become a selling advantage if yo...
3. The Six Behaviors of the Effective Enterprise
No matter how intelligent a leader’s strategy for change, it will fail without the dedicated support of the rank and file. Winning that support often requires more effort than devising the strategy itself. Effective and intelligent behavior is important in all knowledge work. People tend to think of such behavior as particularly important in “valuable” problem-solving or decision-making situations and other high-level tasks such as determining corporate strategy. However, contrary to that no...
4. The five categories of Customers
Too often, businesses look at their customers as they would rows in a spreadsheet. Businesses spend time figuring out how to get more money out of them, analyzing how often they come back and how much they spend on each trip, and figuring out how much a customer will spend on a particular item. But customers can and should be much more than just an income stream. Customers’ experiences can range from completely unhappy to glowingly positive. Both types of customer can greatly influence your company’s reputation. Generally...
Ideally, all enterprises should carry out their daily work exceptionally well. When they succeed in the short term, they should also, to the fullest extent possible, observe their goals and strategies to pursue longer-term opportunities and conquer or avoid threats. Such behavior will require management vision and considerable resources, infrastructure, and dedicated personnel. It is often anticipated and expected that all employees —and in the aggregate, the enterprise itself—always will act effective...
6. The Product Profile Sheet
The Product Profile sheet analyzes your products in terms of the concepts such as: Features. List the key features of your product that add value to it. The more specific the description, the harder it is for competitors or customers to redefine them to your detriment. Benefits. Express them in terms of time or money savings. Express a benefit as a verb followed by a noun. Value Type. Decide whether the benefits are perceived or measurable. ...
7. Goals and Needs
It may sound like an exercise in splitting hairs. What is the big difference whether you use the word goals or needs? The answer is "plenty" when value-driven sales are at stake. It is more than just a question of semantics when you focus on goals and not needs. Goals motivate you to think first like customers; needs encourage you to think mostly like, well, products. It is the difference between you selling features or customers buying value. Goals and needs are not interchangeable terms or concepts. In sel...
8. Three Types of Account Classification
Managing your account base is often a question of maintaining existing customers and finding new customers who are most likely to buy, then engaging your resources to maximize the opportunity. However, some accounts are more profitable than others and let's face it, profit drives your business. You must maximize your returns by satisfying the greatest number of profitable customers. Return can be measured in a number of ways: ROI (return on investment)—the amount of money and time spent on an account; ROE (return on energy)...
9. Gatekeepers Advocates and the Final Decision Maker
Three people stand between you and a successful sale: the customer's gatekeeper, advocate, and final decision maker (FDM).In smaller, decentralized, and less-bureaucratic companies, the same person might assume two or three of these roles. Sometimes, people pretend to assume roles they do not really play. Your challenge is to find out what role each person really plays. You need to know, not assume, who gives the final yes to buy your products. ...