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If you think you can spot a scammer, think again.

If you can spot a scammer from a professional international IFA, you are one of the few, according to new research.

Slick scammers can fool nine out of 10 people with pension and investment con tricks such as offering sky high investment returns and "free advice".

Although three-quarters of people were confident they could spot a scam, when put to the test, only 12% were successful, says the research by consumer watchdogs Citizens Advice in the UK.

The first sign of a scam is usually the way the so-called financial advisor gets in touch. Reputable financial advisors do not cold-call by telephone or email.

IFAs have standards and are regulated and licensed to give advice by professional bodies. These standards do not allow them to cold-call or send out spam text and emails messages by the thousand.

Next comes the free pension review. IFAs do not offer free advice in the UK because they are banned from accepting commission and have to charge a fee.


Fees and commission

Overseas, the way IFAs are paid varies between countries.

Some are paid commission by financial firms for introducing customers and others charge fees.

The risk is if an expat from an unqualified advisor, they may end up with investments that do not suit them because the adviser picks up more commission from the recommendation.

Some countries are trying to boot out cowboy advisors.

The problem is particularly bad in Spain and many Asia Pacific countries, such as Thailand, Malaysia and Hong Kong.

Thai financial regulators are investigating several unlicensed financial firms based in Bangkok and Hong Kong for giving bad investment advice to expats who have lost thousands of pounds from their savings.

In the UAE, most financial advisors are paid sky-high commissions without needing to disclose how much they are paid to the client. Watch out for rogue advisors who will tell you they are paid directly by the product provider - don't be fooled, this comes out of your investment!

When choosing funds with an advisor, make sure they're not putting you into expensive commission paying funds. 


Checking out a financial advisor

Checking out an advisor is worthwhile before going ahead with any meeting.

Ask them to email a few details about their qualifications and licenses, such as:

  • The place where are they regulated and their license number. Regulation is important because a license usually comes with recourse to an ombudsman and a financial compensation service if things go wrong
  • What are their qualifications – several professional bodies offer UK and international training, such as the Chartered Insurance Institute, the Personal Finance Society and the ifs School of Finance
  • Ask for testimonials but do not put too much trust in them. No sensible IFA will give you the details of an unhappy client and scammers have friends or relatives lined up to put in a good word for them
  • Discuss how the IFA is paid before agreeing any contracts – ask about fees and commissions and how these might affect your investment

Financial regulators in every country will have a list of suspect firms they advise not to deal with.

Most post these details on an international scam warning web site to stop crooks working across borders.

However personable the advisor, if you have any doubts, just play safe and take your business elsewhere.


How to find a good financial advisor in UAE

We've taken the time to screen all of our professionals to ensure they're fully qualified, ethical advisors that work for licensed companies. Look for someone with the MSE seal of approval or ask us and we'll point you in the right direction.


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