Much has been written and discussed on how scams and frauds are developed and perpetrated yet that
does nothing to protect the victim or mark from their own behaviors. Identifying scams only treats the
symptoms it ignores the core issue of how the victims exposed themselves to being victimized.
The psychology of investing becomes more important than ever before, as the market place is ripe with
scams, frauds and predatory sales tactics. Amazingly many of the scams are not even reasonably
sophisticated and yet even the most poorly developed scams find an astounding number of victims. The
most telling fact though is that the average victim of an investment scam or fraud doesn't seem to learn
anything from the experience, as these victims become serial victims. Through our work at the Advocacy
Network I was able to interview over 20 victims from both Bernie Madoff's scam and Allen Stanford's
scam. These interviews were to find the thought process behind the step by step decision making
process of the victims. The most shocking revelation was that on average these victims were not once or
even twice victims, on average these people were three-peat victims. This validates that the victim
needs to be protected not from the con-man but simply from themself.
By shifting the focus from the con-man and their behaviors to the victims behavior we can successfully
ensure that any individual can be insulated and inoculated from scams, frauds, and predatory sales
tactics. All the materials developed by the Advocacy Network provide a step by step process to
understand and recognize the psychological triggers that are initiated by the scammers and fraudsters.
There is also a language to the scams and frauds that can be easily recognized. Studies continue to show
that even with all the evident red flags waving investors still jump in with both feet into pools that
obviously have no water in them.
This series of articles will cover single concepts and points which will enable you to make better
investment decisions. But first let's review what commonly passes for investment warnings today.
Buy only from licensed or credentialed financial professionals. Pretty much common sense
wouldn't you say. The only problem is jails are full of licensed and credentialed financial professionals,
so this is not an effective deterrent. Review you account statements. Another common sense
proposition, yet sadly the majority of investors let the statements pile up on a desk in another room.
Buy investment products that you have chosen and checked closely. This is commonly referred to
as due diligence. The problem is that the vast majority of investors allow the financial professional to do
the due diligence as investors have neither the time nor the inclination to complete proper due diligence
and even when they do, they simply don't know where to find the pertinent information. (One of the
key benefits of being a member of the Advocacy Network is our due diligence service on behalf of our
members. We will complete full due diligence on any investment that our members are considering)
Review your account statements. Good in theory, yet many investors let their statements stack up
somewhere around the house.