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The Value of Professional Financial Advice in Avoiding Scams – A Case Study

We all know by now that getting professional advice from a registered, trusted financial adviser is the best way to ensure your wealth creation strategies are best suited to your needs, goals and circumstances. What is also well-known is the prevalence of scams that aim to swindle people out of their hard-earned money – and avoiding scams may not always be so simple. Recently, we came across this exact situation with a client, who thankfully had the good sense to reach out to our financial planning team as his trusted advisers before authorising any transactions with a scammer who had targeted him.

How Did the Scam Come About?

Like many scams, this particular example originated via email. However, what set this one apart from the classic “can I store my late husband’s millions in your account and share it with you” routine was the fact that it was rather convincingly created. The client received a phone call from a well-spoken, genuine-seeming gentlemen claiming to be from “Barclays Investment Bank Australia” with an opportunity to invest in a term deposit with quite remarkable returns. Following a phone conversation where nothing seemed untoward, the client quite rightly requested a prospectus be sent via email to outline the investment product, what he can expect, and other important information that should come with such an investment. Where many scams would fall down at this stage with either nothing of substance to send over, or something poorly assembled, these scammers came prepared with a very slick-looking prospectus document that appeared very genuine on the surface.

What Was the Scam?

Appearing to offer a “Guaranteed Fixed-Term Deposit” product with excellent returns, the PDF prospectus looked too good to be true – and of course it was. Despite the occasional spelling and grammatical errors in the text, the Prospectus was branded up as a Barclays document would be, featured extensive terms and conditions, and even made mention of “speaking with your adviser” to determine if this product would be appropriate for a prospective investor. This was all sent from an email domain that was not the official Barclays domain, however, was similar and certainly plausible as a supposed offshoot of the main bank.

Put simply, the scammers did a great job of making the fraudulent product look legitimate, and backed it up with a phone conversation that left this client with very little doubt that it was the real deal (and a bit of a no-brainer considering the “guaranteed” returns).

What Happened Next?

Testament to the client, they were not to be completely taken for a ride and were sufficiently well-versed in avoiding scams. Despite having $100,000 ready to send (which they would likely have never seen again), their cautiousness around potential scams prompted a call to the advisers at McKinley Plowman. After the situation was explained, and the “Prospectus” forwarded to an adviser for a professional opinion, it became apparent that the client had been a target for fraudsters. The industry knowledge of the advice team came in handy, with information that discredited the scam as Barclays do not offer term deposit products in Australia to retail customers – something many clients wouldn’t know off hand.

Following the conversation, the client was soon confident that the adviser was on the right track, ceased communication with the scammers and didn’t send them a single cent.

Avoiding Scams – Why it Pays to be Aware

The above was obviously a great outcome for the client, and reinforces the importance of establishing an ongoing relationship with a trusted financial adviser to safeguard against the worst occurring. Unfortunately, many Australians are not so lucky in avoiding scams. Outside of an advice relationship, there are many resources available online that anyone can access, which hold critical information regarding known scams and fraudulent activity. One such resource is the Scamwatch service provided by the Australian Competition & Consumer Commission (ACCC). Many financial institutions also maintain a public log of known scams that may impact people, which is useful if scammers have contacted you pretending to be from a particular company. The Barclays example outlined in this article is one they are aware of (link here) but one suspects that it could potentially still fool even the most vigilant investor, as it very nearly did here.

Keeping a keen eye out for potential scams is something that everyone can do, and doesn’t take too much time out of your day. The importance lies in avoiding the potential consequences of becoming a victim of fraud – which can leave people financially crippled with little chance of recovery.

If you think something is too good to be true, trust your instincts and do some more research before committing to anything. Get in touch with your financial adviser for assistance, as any significant investments or transactions should be undertaken in line with your overall financial plan. If you haven’t yet made the step to get in touch with a financial adviser, now is the time to do so. You can reach the McKinley Plowman Wealth team on 08 9301 2200 (Joondalup); 08 9361 3300 (Victoria Park); or via our website.

written by:

Nick Gahan

Nick has been in the financial services industry since 2008 as a financial adviser, and has completed a Master of Financial Planning (MFinPlan) and Advanced Diploma of Financial Services (Financial Planning) with specialist accreditations including Margin Lending and Self-Managed Super Funds.

Nick is passionate about helping individuals and families to create, grow and protect wealth so that they can focus on enjoying the things in life that are most important to them – and finds nothing more satisfying in his work than seeing clients achieve their goals – whether that’s a particular lifestyle goal, a comfortable retirement or going from financial distress to financial comfort.

Outside of work, Nick is all about family time with his wife and two young boys. Camping, four-wheel driving, Auskick coaching, surfing, swimming, and watching his beloved Manchester United.

Nick is an Authorised Representative of Fortnum Private Wealth Ltd.