Avoiding Scams

Protect your personal information

Don't respond to surveys. The purpose of surveys is not to improve the condition of humanity, but to identify and qualify possible customers or marks.

Do not keep ID information on your computer, tablet or phone. If you do your own taxes, offload any documents which contain identity information.

Protect your documents. Do not keep documents with identity information longer than needed. Your shredder is your friend. There are published guidelines on how long to keep important documents.

Overconfidence can be expensive

Avoid thinking I'm too smart for that. Most of Bernie Madoff's customers were intelligent professionals, who were absolutely sure they were too smart to be taken. Perhaps a little greed and wishful thinking overrode common sense.

That's where the money is

When asked why he robbed banks, Willie Sutton is alleged to have said, "Because that's where the money is." By the same token, scamsters today go after doctors, dentists, attorneys, and seniors because that's where the money is.

How to Avoid Financial Scamsters

Ken Fisher spells out how to spot people like Bernie Madoff on page 45 of his excellent book Debunkery.

"1. Your adviser also has custody of your assets--this is true in 100% of the cases.
"2. Stated returns are consistently great--almost too great to be true. Also true in 100% of the cases.
"3. The investing strategy is murky, flashy, or too complicated for the advisor to explain to you so you can understand it--almost always.
"4. The adviser promotes himself (or herself, though the rats are usually male) as an 'exclusive' club, or otherwise distracts you with flash, bling, and connections--none of which have anything to do with investing.
"5. You hired the adviser based on a recommendation or through an intermediary and didn't do any real due diligence yourself. Con artists hate anyone who does real due diligence and avoid them."
I especially like #1 above.

Ken Fisher is a successful, but expensive financial planner who has written several good books, and at one time wrote a column for Forbes. He regularly runs full page newspaper ads, so business must be good. I'm not willing to pay for all that overhead.