By Cameron Nakashima, BBB Great West + Pacific
Let’s say you have the following goal: to invest your money and achieve a better future. According to a recent Gallup poll, you’re not alone. 85 percent of Americans polled said they’re actively seeking personal finance guidance. However, the Better Business Bureau (BBB) found that without a clear starting point, too many people end up making poor investment decisions, losing money to costly missteps and fraud that promises quick wealth.
At the BBB, we’ve seen firsthand how financial uncertainty and the desire to “get ahead in life quickly” can open the door for fraud. Our latest Scam Tracker Risk Report named investment scams the “riskiest” in North America; this designation was based on scam susceptibility (the percentage of people who lost money to the scam) and median dollar loss. We found that 80 percent investment-related scam reports involved some level of money loss, and the median loss was about $5,000 (though many people reported losses over $10,000).
Most of these losses involved following advice from convincing (but unvetted) social media investment “mentors” or gurus who convinced their targets to put thousands of dollars into a fake investment brokerage, which was really just an account where the fraudsters could take the money and run.
That’s why working with a trusted financial professional isn’t just a smarter option, it’s safer. You can build a plan with someone who knows what they’re doing and is accountable to act in your best interests.
According to recent surveys conducted by Ramsey Solutions, 44 percent of people who work with financial advisors have over $100k saved for retirement, while only nine percent of solo investors have that much. Of the millionaires surveyed, 68 percent say they worked with an advisor to build their wealth.
What does this mean? One key takeaway here is that you don’t need to be rich to start working with a financial professional. And actually, working with a trusted financial advisor might just be your ticket to building wealth in the first place.
There’s something of a cultural myth that financial advisors are only for those nearing retirement or people who already have a great deal of wealth. However, there are trusted advisors for every budget, and getting started earlier often leads to better outcomes down the road.
When you hire a qualified advisor, the tricky part isn’t investing itself; it’s knowing who to trust. Luckily, that’s where the BBB can help add transparency and guidance.
To be clear, the BBB doesn’t offer financial advice; however, it does help people make confident, informed decisions when looking for professionals that do. It does so with four tools, starting with business profiles on BBB.org. People can read verified reviews, review complaint histories and see how a business handles problems.
Secondly, the BBB offers accreditation for financial advisors that meet the BBB’s Standards for Trust. These professionals have committed to ethical business practices, transparency and accountability.
BBB.org also offers a Financial Wellness HQ, a free online hub to learn how to vet financial professionals, avoid scams, understand your options and the Get a Quote Tool. This allows people to contact multiple BBB accredited financial advisors in their area to compare pricing and services.
If you’re ready to start investing, begin by doing research. Keep in mind that there are a lot of fraudulent financial gurus who want to trick you out of your hard-earned money, so research and caution should always be exercised when making an important decision about who you will trust. Online research tools such as BBB.org can help you quickly perform due diligence and preliminary vetting of businesses as you seek out credible professionals.
As with all important decisions, choosing the right person to help invest your money starts with trust.