Washington State Department of Financial Institutions

How to Protect Your Money From Theft by Dishonest Investment Advisers

Topics Covered:

Overview

With more people in charge of their investment portfolios than ever before, Washington State securities officials are warning investors of the increasing sophistication of investment advisers who steal money from unsuspecting clients.

Victims include everyone from the retired couple next door, to the hotshot young executive hoping to make a fast buck, to the doctor and his country-club friends. Recognizing that registered investment advisers are thinly regulated at the federal level, state securities agencies are moving aggressively to catch these swindlers and warn everyone that constant vigilance is the basic ingredient of being an investor in today's securities market.

Although most investment advisers are honest, those that are not see the burgeoning field of financial advice as a great way to line their own pockets. The danger is compounded by the average investor’s desire for maximum return, the concern of retirees worried about outliving their savings, the increase in investment opportunities, and the growing number of individuals holding themselves out as qualified investment advisers nationwide.

The States Take Action

To date, all but two states require investment advisers to be licensed. (Ohio, and Wyoming are the exceptions.) Most states require investment advisers to pass an examination, undergo background checks, renew their registration annually, and report changes in their businesses or addresses promptly. States also review an applicant's disciplinary history and financial stability prior to allowing the investment adviser to conduct business in a given jurisdiction.

Buyer Beware!

Whether due to a self-directed retirement plan, an inheritance, saving for a child's education, or other reasons, today, more Americans than ever before find themselves in charge of their financial investments. Handling those investments are some of the most important decisions anyone can make. Although the vast majority of financial advisers are trustworthy, be on the look-out for those that are not. Being an investor requires education and attentiveness. Start asking questions before it's too late.

For more information...

The Department of Financial Institutions
Securities Division
360-902-8760 or 1-877-RING DFI (1-877-746-4334)

DFI