How scammers gamble with your RRSPs

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    Three popular money-grabbing schemes that can ruin your retirement
    and seven ways to secure your savings

    The RRSP deadline is fast approaching on March 1st, and while Albertans continue to face hard economic times, saving for retirement is turning into a nightmare rather than a dream for some. Though it can be tempting to seek out lucrative RRSP investments, BBB is urging people to invest wisely to avoid being scammed out of their Registered Retirement Savings Plan funds.

    “Depending on your financial circumstances, it can be tempting to enter into an investment that promises a high return” says Mary O’Sullivan-Andersen, president and CEO of BBB Serving Southern Alberta and East Kootenay.  “With tax season upon us, scammers are targeting hasty, careless investors in hopes of easily scamming them out of their hard-earned savings. Start your investment journey with trust and check with BBB before making a financial commitment.”

    Here are some of the most popular RRSP scams:

    Tax-free withdraws:

    • Consumers are promised a $10,000 cash return for a $20,000 investment (from their RRSPs) in an “RRSP-eligible company”.

    • Once you hand over your earnings, the company will more than likely close its doors leaving you empty-handed.

    Exempt securities scam:

    • Exempt securities are not illegal if they are sold by companies that are permitted to sell them.

    • You may be approached by an unsolicited offer to invest in an exclusive deal if you sign some paperwork, which usually involves you lying about how much money you make. Exempt securities are dicey as you run the risk of losing your entire investment.

    • Being required to lie about your investment is a red flag of an illegal transaction and you are more than likely getting scammed.

    Offshore investment:

    • Fraudsters promise investors a high return from an off-shore investment while avoiding taxes.

    • If you hand over your money to a stranger in a foreign country, you may never see it again and you run the risk of owing the government money in back taxes, interest and penalties.

    Protect your RRSPs and avoid scammers looking to cash in on your savings with these BBB tips:

    • Get it in writing. Ask for full written documentation about your RRSP investment. Never sign any document you have not read carefully or don’t fully understand.

    • Resist pressure. A legitimate financial professional will never push you or use high pressure sales tactics to convince you to enter into an RRSP deal. Take your time to gather information, research and ask questions before making a financial commitment.

    • Don’t be tempted by too-good-to-be-true deals. Just because an RRSP offer seems like a good idea at the time, it isn’t always the case. Watch out for offers promising or guaranteeing an unusual high return of investment.

    • Know the difference between an investment adviser and a financial planner: Financial planners work with you to develop a tailored financial plan to suit your needs including savings, insurance, taxes, retirement, estate planning and investments.  Investment advisors may only be able to give you a narrow range of guidance for specific investments. Be sure to determine what your financial needs are before hiring a professional.

    • Ask for credentials: Ask your financial professional if they are affiliated with the Financial Planning Standards Council of Canada as they are the primary authority for financial professionals in Canada. They enforce and uphold the standards of financial planning through Certified Financial Planner certification.

    • Know which questions to ask: Here are some of the questions you should always ask when hiring any financial professional: What experience do you have, especially with people in my circumstances?  What credentials do you have? What products and services do you offer?  How are you paid for your services? What is your usual hourly rate, flat fee, or commission?

    • Arrange a meeting in person: Be sure to meet potential advisers face-to-face to make sure they clearly understand your needs and financial goals. Make sure to check-in regularly with your financial professional to ensure your needs are being met and goals are on track.

    For tips you can trust, visit bbb.org

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