7 Fraud Prevention Tips for Retirement Investing

May 6, 2022

Consumers reported losing more than $5.8 billion to fraud in 2021, a 70% increase over the prior year. Almost 2.8 million people filed a fraud complaint – an annual record. Investors need to be more vigilant than ever to combat fraud and protect their investments. Are you doing everything you can to stay informed and secure? RITA is committed to educating investors to help them prepare for the future. So, we’ve compiled seven fraud prevention tips every investor should follow.

1. Do Your Own Due Diligence Before Investing

It is not the responsibility of passive custodians to provide investment analysis or recommendations or to perform due diligence concerning your investment decisions. As such, RITA has designed a set of Pre-Investment Questions to help you in your efforts to evaluate the soundness, prudence, and merit of your investments. Please note that this is not a comprehensive list of questions but simply a starting point. The answers to these questions are not a substitute for your own due diligence. We also strongly encourage investors to make use of legal, tax and financial advisors to support these efforts.

2. Be Aware of the Common Types of Fraud

Investment fraud comes in many forms. The more familiar you are with the different types of fraud, the more easily you can recognize potential scams and protect yourself and your loved ones. The following are the most common types of investment fraud, according to the SEC (click on each name to learn more).

3. Research All Potential Investment Professionals or Firms

A legitimate investment professional must be properly licensed and, depending on the type of business they conduct, their firm must be registered with the Financial Industry Regulatory Authority (FINRA), the Securities and Exchange Commission (SEC), or a state securities regulator. Use the following tools to help:

  • BrokerCheck by FINRA (for Brokers or Firms): BrokerCheck tells you instantly whether a person or firm is registered, as required by law, to sell securities (stocks, bonds, mutual funds and more), offer investment advice, or both.
  • SEC’s Public Disclosure & EDGAR Databases (for Investment Advisers or Investments): Use the SEC’s databases to learn about and individual’s or firm’s background, registration status, and more.
  • Find Your State Securities Regulator (for State-Specific Information on Broker-Dealers, Investment Advisers, or Investments): Go to your state securities regulator to check out additional resources and information specifically for your state.
  • NFA’s BASIC Check (for Commodities/Futures/Foreign Exchange Dealers): BASIC is a free tool that NFA Members and investors can use to research the background of derivatives industry professionals.
  • List of Individuals Barred by FINRA: The individuals on this list have a FINRA bar in effect, which means FINRA has permanently prohibited them from association with any member in any capacity.
  • SEC Action Lookup: Check out formal actions that the SEC has brought against individuals, including those who are not brokers.

4. Take Your Name Off Solicitation Lists

You can reduce the number of sales pitches you receive by taking your name off of telemarketing and junk mail lists. Most legitimate businesses will honor these requests, so be skeptical of any solicitations received after registering to be removed from any solicitation lists. Visit the links below to opt out:

5. Use RITA’s “Check Before You Invest” Checklist

Check Before You Invest is an investor education awareness campaign created by the Retirement Industry Trust Association, the trade association for self-directed retirement plan providers. The purpose of this initiative is to promote investor awareness through educational materials and resources provided by state, federal, and private agencies.

Instantly become a savvier and more informed investor with our “Check Before You Invest” checklist. We recommend that you utilize our checklist and additional resources provided while you contemplate any self-directed investment in your retirement plan.

6. Know the Points of Recourse for Victims of Fraud

If you have lost money in a fraudulent investment or scheme involving a self-directed IRA or a third-party custodian, or have information about one of these scams, you should:

7. Choose a Trusted IRA Custodian or Provider

When it comes time to invest with your IRA, you need to choose an IRA custodian or provider that you can trust. When you choose to work with a RITA member, you know you’re in experienced hands. All RITA members are:

  • Regulated by Federal or State Banking Authorities
  • Required to Have Regular Audits & Carry Multiple Insurance Policies
  • Operated According to IRS & Department of Labor Requirements
  • Privy to Industry Guidelines
  • Attendees of RITA’s Premier Industry Events & Educational Opportunities (Conferences, IRA Institutes, SDIP Certification, & Webinars)
  • Committed to Abiding by the RITA Code of Ethics

To find a trusted IRA custodian or provider that works with your desired alternative asset, fill out RITA’s simple Find an IRA Custodian form.

Learn More Fraud Prevention Tips

For more fraud prevention tips and information, please visit RITA’s Anti-Fraud Resources page.