Fisher Investments UK Reviews How to Spot and Avoid Financial Scams

Fisher Investments UK Reviews How to Spot and Avoid Financial Scams

According to the UK’s Office for National Statistics, there were 3.7 million incidents of fraud in England and Wales in the year ending December 2022 – and losses amounted to £2.46 billion in the fiscal 2021/2022 year.[i] In Germany, law enforcement officials estimate nearly €1 billion in investor losses due to online trading fraud each year.[ii] Across the Atlantic, US consumers lost over $8.8 billion to fraud in 2022, according to the Federal Trade Commission – a 30% increase from the prior year.[iii] Fisher Investments UK reviews many kinds of financial fraud worldwide, and in our view, knowing more about criminals’ common tactics can help investors avoid them.

The financial publications Fisher Investments UK reviews highlight myriad stories of how bad actors took their ill-gotten gains. In 2020, police gaoled Scottish financial services director Alistair Greig for coordinating a Ponzi scheme (when earlier investors are paid out with new investor money without their knowledge).[iv] His firm, Midas Financial Solutions, lured investors with so-called guaranteed high-interest accounts, providing the swan song of high returns safe from loss. Meanwhile, Greig used client payments to fund a luxurious lifestyle – buying expensive cars, acquiring holiday properties and attending numerous Premier League football matches. Earlier this year, US police arrested Raymond Brewer for stealing over $8 million from investors. Brewer falsely claimed to be building machines – called anaerobic digesters – that could convert cow manure into biogas, thereby generating millions in revenue.[v] He said investors would receive two-thirds of the profits, plus tax incentives. Similar to Greig, Brewer used client funds to furnish an extravagant lifestyle – a common trait amongst fraudsters, in Fisher Investments UK’s experience.

Besides Ponzi schemes, investors must also contend with a relatively newer threat: technological advancements, which have changed the investment fraud landscape. According to Barclays, 77% of financial scams now happen on social media, online marketplaces and dating apps.[vi] Fraudsters use these platforms to cast a wide proverbial net, reaching thousands of people instantly – sometimes dubbed phishing. Scammers can also use artificial intelligence (AI) technology to clone someone’s voice and impersonate a friend or family member to request money – a threat recently highlighted by UK Financial Conduct Authority chief Nikhil Rathi.[vii]

Fisher Investments UK reviews these stories in our coverage of financial headlines, and we have found some common warning signs. For one, fraudsters often request transferring funds from the victim to another individual’s account or an unregistered custodian. In many cases – like the aforementioned examples – the destination is actually the criminal’s personal account. Secondly, investment scammers tend to make unrealistic guarantees. We have observed some bad actors tout huge, flashy returns to grab investors’ attention. Relatedly, we have also seen many fraudsters promise steady or stable returns, year in and year out, regardless of the broader market environment. Though global equities’ long-term annualised return is 10.0%, that figure includes plenty of negative volatility and down years along the way.[viii] Fisher Investments UK thinks it is suspicious if someone promises a steadily positive, uniform return with no downturns. Overly complex investments or strategies (e.g., complicated technological processes or never-before-seen asset classes) might be a red flag, too – in our view, purported sophistication can be a distraction and divert investors’ attention away from fraudsters’ intent.

Fisher Investments UK thinks investors benefit from checking a few key boxes as a safeguard against fraudulent activity before choosing investments or advisers. First, only transfer your money to an established third-party custodian – in our view, not giving a crook custody of your assets is the most effective fraud aversion technique. This separates investment decision-making and physical custody of the assets, and if you don’t transfer money to a bad actor, they cannot run away with it. Online access can help too, in our view, as it allows you to check on your money when you want. If you are using an open-end investment company or fund, understand who is doing the accounting and oversight – ensure this is a non-affiliated third party. Secondly, know what you are investing in. Your adviser should be able to help you understand both the products and the strategy – both the risks and how they generate returns. Finally, set realistic expectations for investment returns. Understand that negative volatility is simply part of investing – there is no way around it, in our view. You will inevitably face down years when investing in capital markets, and any financial professional who claims they can avoid it and still deliver equity-like returns is presenting a very unlikely picture you should probably question.

This list isn’t exhaustive. In Fisher Investments UK’s review, avoiding financial scams is a perpetual process, with technology offering new twists along the way. But with these tips in mind – along with a healthy amount of scepticism and carefulness – we think investors are better prepared to elude financial fraud throughout their investing horizon.

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