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How to Stay Safe from Fake Investment Advisors?

IamCheated.com Research Team | April 30, 2019  5:27:pm

How to Stay Safe from Fake Investment Advisors?

Taking investment advice from good investment advisors helps achieve investment goals, as they identify the best plans and products for your needs and make your money grow.  But, at the same time, taking advice from fake investment advisors can mess up your finances. So, you have to be very careful while choosing your investment advisors as they play a very important role in meeting your financial goals.

There are many fake advisors out there, who cheat people in the name of offering investment advice. Recently, Securities And Exchange Board Of India (SEBI), had passed an interim order banning three illegal investment advisors – Rishabh Jain, Ubaidur Rahman, and G. Kadar Hussain from providing investment advice to people.

The trio cheated many investors in the name of providing investment advice, for which they swallowed a huge amount in fees. The investment advice provided by these advisors was fake and many people have complained to SEBI on this.

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How to stay safe from fake investment advisors?

Here are certain tips which help stay safe from fake investment advisors:

1. Check advisors credentials

To check the credentials of the investment advisor, first, you must find out if it is a distributor or a SEBI-registered investment advisor from the online firm’s website. You then visit the SEBI website, if you want to verify a SEBI-registered investment advisor and also visit the website of the Association of Mutual Funds of India, AMFI, if you want to validate a distributor.  In the next step, you must enter the name of the person or the website or the registration number and you will get more details.

2. Avoid stock tips

Each investment advisor is supposed to do risk profiling on their customers and offer products that are best suited to them. They must even consider customer expenses, earnings, and spending. But, fake investment advisors never do risk profiling and they don't even ensure product suitability.

A fake investment advisor which SEBI had banned used to offer just one product which was stock tips.  But, a registered investment advisor has to offer a wide variety of products like equity mutual funds, debt mutual funds, fixed deposits and so on.

You must keep one thing in mind that if the advisor is providing you an offer which is too good to be true, stay away from him.

3. Online payments

You must be very careful before making a payment to an online advisory firm. If you simply make the payment without checking the background of the advisory firm, there are chances of your advisor running away with your money. Most of the fake investment advisors stop picking up investor’s calls once they find out that stock tips provided by them are failing.  Normally, genuine financial firms will have a dedicated call center for customer queries and make a confirmation once they receive the payments.

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