Investors fail to spot excessive claims

Your clients may think they are relatively savvy investors, but a new survey suggests that Canadians are not very good at spotting “too good to be true” offers.

The survey was conducted by the AMF, Quebec’s securities regulator, and found that 78% of Quebecers felt they were relatively immune from fraud. But when asked their opinion of an investment that offered a 2% monthly return, only about half were suspicious.

That 2% monthly return would compound to 27% on an annual basis, indicating either an extremely high risk investment, or an outright fraud.

Fifty percent of respondents admitted they were not very knowledgeable about financial products, and 59% said they would like to be better informed as consumers of financial services.

The survey results support the AMF’s financial education strategy, which tells Quebecers “Before investing, investigate”.

The survey findings were released in connection with Journee Education 2011, the second gathering of financial education partners in Quebec set up by the AMF.

Have you steered a client away from a suspicious investment? Tell us about it in the Comments section below.

Staff

The staff of Advisor.ca have been covering news for financial advisors since 1998.