Protect Yourself From Financial Services Fraud

What’s Wall Street’s dirty little secret? The heavy hitters in the US financial world are rife with fraudulent and deceptive practices that put investors at risk without realizing it. In a recent Flash Back Friday episode of the Creating Wealth show, host Jason Hartman’s guest Jask Waymire of Investor Watchdog offers tips on how investors can protect themselves and their money.

As the beginning of every Flash Back Friday episode of the Creating Wealth Show, Jason warns listeners that Flash Back Friday episodes are not current. But the problems in the country’s financial services sector are timeless. And, as guest Jack Waymire notes, there’s no way to reform the massively corrupt system, so investors need to know how to protect themselves from fraudulent financial planners and other kinds of deception.


As always, Jason opens the segment with a commentary on trends in investing and other financial news. In Episode 546 he notes that a Wall Street Journal article on US employment has some interesting data for income property investors.

Unemployment and Homeownership

According to labor force statistics reported in the article, the “unemployed” actually fall into several categories, such as those who are actively looking or work, those who are not looking for work, those who were looking for work but have given up the search, and so on. Jason notes that one large category of those not working say that they could search for a job, but they have logistical issues that prevent them from pursuing their search.

One of those logistical issues is transportation, but another is housing. Jason notes that odd as it may seem, high home ownership rates actually correlated negatively with employment. Why? A valuable asset for a job seeker is mobility – and that’s problematic for homeowners.

Renting a residence allows for that mobility, though – it’s easy to move to take a job. As Jason notes, income property investors help provide that mobility by making quality rental housing available in cities all over the country. Giving tenants mobility is a good thing, he says – and when they move, it’s possible to raise rents.

Keeping Suburban Options Open

Another way investors provide people with valuable housing options has to do with what another news piece calls the “war on suburbia” – a reference to recent ordinances in some areas requiring greater housing density per acre and encouraging people to live in more densely populated urban areas rather than suburbs. But investors who make quality single-family homes available in suburban areas are offering renters a valuable asset.

Student Loan Debt Creates Renters

Another trend that benefits investors – and tenants too – is the ongoing student loan debt crisis. With a debt burden of over $1 trillion nationwide, many recent college graduates simply can’t manage buying a house. Add in the need for job mobility and you have a long-term renter base that continues to grow. Investors now have a huge opportunity to serve these people with quality housing – and, Jason adds, make fortune too.

Old myths about investing in gold still persist – and Jason recounts a recent Facebook exchange he had with an investor who boasted about his recent acquisition – on paper – of gold bars. Asked if he’d ever seen this gold, visited the vaults where it was supposed to be stored, or how he could be sure the gold was really his, the investor offered no answers. As Jason points out, much investing in gold and other metals takes place solely on paper, with the investor trusting that things are on the up and up. Not so with residential real estate, where real dollars buy real assets you can touch and see.

Jack Waymire – the Investor Watchdog

That question of credibility and honesty in investing and financial services is one that concerns guest Jack Waymire, whose website, Investor Watchdog, aims to help investors gee the tools and information they need to protect themselves from the rampant deceit and fraud that’s endemic in the nation’s financial services.

Deceit Drives Wall Street

Wayiure points out that deceit drives US finance from the highest offices on Wall Street on down. It’s entrenched and massive, and there’s not much to do about reforming the system. Wall Street financiers own too many politicians sitting on regulatory committees and they’re getting too rich from these practices to ever be truly reformed. So it’s up to the individual investor to take the steps needed to spot deceptive and unqualified financial planners and managers.

The financial industry is almost entirely unregulated. That means that just about anyone can claim the title of financial planner or manager – even if they are, as is most often the case, just sales representatives pushing financial products such as insurance.

These people often call themselves financial planners. But in reality they’re more likely to be sales reps for the financial company, whose job it is to sell financial products. But because titles like “insurance agent” and “representative” don’t carry the same clout, they call themselves financial planners, often with little or no training or education to back that up.

Financial planners do what the title says – they develop plans to help investors achieve their long and short-term goals. But all too often, Waymire says, a sales rep masquerading as a financial planner will produce a plan that’s packed with recommendations for buying a variety of often unnecessary financial products.

That’s how the “financial planner” makes money, since he or she will only be paid on commission. That’s the law for their level of certification. But qualified financial planners won’t collect a commission.

Finding a Qualified Financial Professional

Their services will be fee based. What’s more they’ll be a certified fiduciary, too – what’s known as a Registered Investment Advisor, or RIA, held to higher professional standards and verification requirements. They’re committed to putting the investor’s interests ahead of selling products, since that’s not how they make their money.

There’s no regulation and few laws controlling this kind of activity. And since it makes big banking entities a lot of money, it’s not going away. In fact, Waymire notes, Wall Street banks pay out around $300 million annually for lobbyists who actively fight regulation and disclosure laws aimed at creating greater transparency in the industry.

That’s why it’s essential for investors to protect themselves. The free tools available on Waynire’s site gives them the means to do that – and make sure that Wall Street’s dirty little secret doesn’t derail investing goals.(Featured image:Flickr/SqueakyMarmot)

More from Jason Hartman:

CW 546: FBF – Dubious Ethics and Deceptive Practices in the Financial industry with Investor Watchdog Jack Waymire

The Jason Hartman Team

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