Many Americans simply can't spot scams

By kschilling

The Advocacy Network


As producers, we have a higher calling to assist consumers and investors (who obviously make up the vast pool of prospects for our services) navigate the choppy waters of financial decisions. Recently, the FINRA Investor Education Foundation released some disturbing findings which demonstrated a consistent inability among consumers to figure out when someone is trying to rip them off.

More than 80 percent of those surveyed stated they had received solicitations to buy into a potential scam. Surprising? Not really. But more important is the finding that more than 4 in 10 Americans couldn't spot the obvious warning signs of a potential scam. When presented with the idea of guaranteed returns on an investment or promises of returns in excess of 100 percent per year, this group gave their approval.

My point here is that one of the most disturbing findings is that almost 50 percent of Americans can't identify the red flags of fraud.

The reality of investments is there is no such thing as a sure thing, and certainly, promises of enormous returns are the stuff of fairy tale endings. In order to confirm this for yourself, just ask why would anyone share an opportunity to get 100 percent when they could simply hoard it for themselves? The reason this type of pitch is shared is because the perpetrator is going to make their money off you and not any investment.

Seniors are even more susceptible to fraud, as those age 65 and over are 30 percent more likely to buy into a scam than those in their 40s.

A major reason that this victimization continues is that those who are taken advantage of tend to be very reluctant to report what has happened to them. While most would think that this is due to shame or embarrassment, the truth is that most victims decide against telling the authorities because they don't think anything can be done.

So, what does this have to do with insurance professionals? The opportunity here is to help potential clients avoid victimization by educating them on financial realities and also helping them understand how to identify the glaring red flags of scams, fraud and predatory sales tactics. As you work hard everyday offering prudent and meaningful financial solutions, your prospects are bombarded with fraudulent opportunities to double, triple and quadruple their money in risk-free, fully guaranteed scams and frauds. Ignoring this doesn't change the psychological manipulations used by the scammers and predators.

Sadly a part of the human condition is greed, and with this comes the false belief that there are magic silver bullets and risk-free investments which can produce stunning returns. This belief is no different then believing in fairy tales, unicorns, Bigfoot and Area 51. There are more fantasies created from money than any other topic.

We are professional money managers. Not in the strict definition of the money manager role on Wall Street, but we actually produce money when it is most needed and our abilities to use a life insurance contract gives us the moral, ethical and legal ability to create pools of money. When you focus on this, you come to the realization that no other financial professional has this ability. Bankers, brokers and loan officers lack the ability to provide the financial security a life insurance professional can.

An advocate is one whose only concern is the best interest of their client. There is no conflict of interest, nor is there any ulterior motive. The only intent of the advocate is to provide the best solution for the present condition of the client. That solution should only have the client's best interests in mind, and any other concerns should be totally eliminated.

As an advocate, you should have a keen awareness of the process of victimization and why people fall into these traps. This awareness will allow you to educate and navigate clients through the psychological triggers that influence them towards greed. Sales manipulations are no better than illegal scams and fraud. The psychological triggers can be used for good or evil, but in the end, a person's best weapon is the full understanding of how these triggers are set off and how they will influence anyone into a position of victimization. Any client that is a victim in any scenario is a poorly positioned client. We need to create clients and not victims.

In the end, being a professional advocate will allow you to build more clients, retain more clients and offer something different from any of the competition. It takes more effort and it takes a real commitment to ensure that the best interest of the client is your only concer, but in the end, it pays huge dividends and makes for incredible profitability.

See also: Seniors lean dangerously toward the bright side: Research shows older adults are too trusting