How to protect yourself from rogues/fraud

As an independent financial adviser, this sort of news and behaviour is very very disappointing as it reflects so badly on all the hard-working honest advisers/providers out there. If we examine, the most recent cases where these types of event shave happened, from the rascals of David Ross from Ross Asset Management, Paul Hibbs from Hanza Ltd to Barry Kloogh, they all have some common traits. Here are the things to look for and look out for when you are investing with an adviser/company:

• Are the funds held independently through a third-party custodian such as FNZ or Aegis? Always transfer your cash direct to the custodian and never directly to the adviser. You independently verify the correct account number of the custodian via an official bank deposit slip or make a search of payees via internet banking to get the confirmation of the correct account number. You should only be sending an adviser money for planning fees/work and not the investment itself
• The custodian will send you 6 monthly reports confirming the assets that are being held and they should match up to the adviser’s reports that they provide
• Withdrawals from your portfolio can only be made to your bank account and that account is proven/verified to the custodian at the set-up stage or at any time you want to change the account.
• Once invested, you should be able to view the portfolio online at any time
• Are the investments that you are investing into third-party investments such as publicly listed shares/bonds or managed funds. This way there is no conflict of interest
• If you are investing into companies that are being run by the adviser (such as Paul Hibbs’s Hansa Ltd) – that is a conflict of interest and should be disclosed and presents very large warning signs in my view.
• Are the returns that you’re receiving, in line with market returns? Large variations in returns can be a signal that something may be a miss. Ponzi schemes normally have exaggerated returns to encourage more investment in to keep the cycle going.
• How much and how are you paying for the services, do the fees match up in the reports with what has been disclosed to you?
• Sounds too good to be true – perhaps it is – be aware of unsolicited offers proclaiming wonderful things
• What documentation is being provided and can it be independently verified

Are they part of reputable organisation, do they belong to a dispute resolution service, do they have adequate insurance? All this information can be found on the disclosure statements and then you can then verify if needed with the associated parties.

In summary, Barry Kloogh was reportedly running over 30 companies and these companies are what some investors were in investing into – knowingly or unknowingly. Paul Hibbs was similar, having clients invest into companies that he was running his own investment scheme out of. Here at Optima Wealth, we are only a company for trading purposes and not an investment itself.

Please, if you know of anyone investing, feel free to pass this information on to make sure their investment is safe and secure.

So not only do you need to protect yourself around your hard-earned wealth from some rogues out there, there are also people who want to scam you out of your money. Here is some useful information the FMA have provided about investment scams.

https://www.fma.govt.nz/assets/Brochure/150115-brochure-how-to-spot-an-investment-scam.pdf

In summary, never pay your investment directly to the adviser, all assets should be held independently, understand what you are investing into and verify the information. If in doubt, get a second opinion from a professional reputable adviser.