Alligator-Proofing Your Retirement

Heidie George

Examiner, Utah Division of Securities

Why this matters to you . . .

These are the top four results when you google “alligator proofing your estate”.

You are a target.

(I know you may not like it, but it’s true.)

Why?

– You have assets (retirement nest egg)

– Interest rates are low – chasing higher returns

Who is taking aim at you?

1. Con Artists/Fraudsters

1. Friendly salesmen who want to sell you “safe and secure investments.”

The Guy Next Door with a “Can’t Miss” Investment Offer

“Buddy, have I got a deal for you!”

• Power

• Influence

• Charisma

• Strong Cover

Characteristics that fraudsters share are:

• Credentials

• Performance returns

• Charges or expenses

• Risk (improperly minimizing)

• Financial Statements

Recognizing and Avoiding Investment Fraud

The Red Flags

Promise of High Returns

Promise of Little or No Risk

Prey on Investors’ Trust

High Pressure Sales Tactics

The Ponzi Scheme

• The hallmark of all Ponzi

schemes is to create the illusion of

a successful investment or

business by using money from new

investors to pay earlier investors.

• There is typically no legitimate

business revenue, but investors are

provided with false statements or

reports to create the appearance of

high returns on investment.

The Ponzi Scheme

Madoff was able to keep

his Ponzi running for

40+ years, but all Ponzis

eventually collapse

(most of them much

sooner) when the new

money coming in can’t

keep pace with the

demand for money

going out.

The Ponzi Scheme

Start-Up Companies

New companies typically require capital ($$$) in order to start the operations of the business.

Watch out for:

Offers of stock that you can not easily resell.

Investments in unsecured promissory notes.

Other Common Investment Scams

FOREX Trading Programs

Equity Stripping or Equity Milling

Precious Metals Scams

How to protect yourself from fraudulent

investments

• Understand Risk v. Reward

– Rule #1 for investing: Risk and Reward go together and cannot be separated.

– Every con artist tries to break

Rule #1.

Aggressive Sales

Tactics

• Fear – Create a problem he can fix

• Greed – “Think of what you could do with this money”

• Trust – “I am doing this as your friend”

• Scarcity – Only one spot left; Only one day left

How to protect yourself from aggressive sales tactics

• Understand costs and fees

– Even a small difference makes a big difference over time.

• Understand what your “Adviser” is licensed to sell

Affinity Fraud

Affinity fraud uses common membership in a church, family, tribe, etc.

“I am also a member of your _________ so you can trust me.”

Name Dropping -- Same “deal” was

made with a prominent leader of your organization.

Let’s make this really simple . . .

1. Slow and steady wins the race (even after you retire).

2. Remember Risk v. Reward

3. Don’t be pressured or frightened into any financial decision.

4. Don’t invest with your _______. (neighbor, relative, church leader, co-worker . . .)

Thanks!

Heidie George

Securities Examiner

Utah Division of Securities

Invest wisely, and watch out for those alligators!