In our office we have been discussing our biggest concerns for investors in 2024. One of the topics of discussion has been the continuing growth of financial scams. Criminals keep getting more clever and bolder. New technologies are also making it easier for them to fool and scam people. Every year we need to add to our list of things to watch out for.
I have written several articles on financial fraud and each time I do my inbox fills up with questions from readers who want to talk about their situation. As I visit with these individuals certain trends emerge and some of them are not unlike what investigators find when reviewing an airplane accident.
Like most pilots, I spend a lot of time reading airplane accident reports. We all want to know what caused someone else’s accident in hopes the knowledge might help us avoid our own. Passengers in a single engine, single pilot airplane tend to worry about mechanical failure or pilot incapacitation, but in reality, those two items account for only a small percentage of accidents. And even in those cases many accidents could have been avoided if pilots would have recognized early on what is known in aviation as the “Accident Chain.”
The accident chain is a series of events that lead up to the final disaster. As the series progresses there are several opportunities for a pilot to resolve or exit the situation and avoid the accident. By noticing the initial problems and acting proactively the pilot has a much better chance of living to fly another day. The problem is that once pilots get in their mind the goal of reaching their destination, it is often difficult to accept failure, so they press on.
As people have described to me their various financial disasters, I have found a similar “accident chain” to be at work. It is rare for someone to go from having money one moment to being ripped off the next. It is more likely that a series of questionable events transpire, any one of which should have given the victim the opportunity to correct their course. We sometimes call these events red flags. Most people I meet with who have lost money can recount quite clearly the accident chain that led to the loss. Most admit that before the money changed hands they felt feelings of uneasiness that caused them to question why they were moving forward. Like some pilots, they have a hard time turning back once they get set on a course, even if common sense is blaring warnings in their ears.
If you see a red flag, stop immediately. Call a trusted friend or your CPA. Ask your parents or your kids for some advice. If the person who has reached out to you is honest, they will have no problem visiting with one of the other trusted people in your life to explain what they are wanting you to do. Criminals don’t want you to involve anyone else. They want to talk to you only and they want you to act quickly. This alone might be your biggest red flag.
Let me add one final note for 2024. Artificial intelligence is now capable of imitating voices. This creates a new level of risk as this technology has already been used by criminals. If you are ever in doubt, a good policy to confirm the person who called you is actually who they say they are is to hang up and call them back on a number you know to be good. I always do this when someone from one of my credit card companies calls or texts about anything important. This is one method to stop the fraud accident chain before it even gets started.
Let’s resolve in 2024 to slow down the spread of financial fraud by taking control of any suspicious situation when it first appears. Criminals are very good at what they do. They wouldn’t pay to send out all those calls if it wasn’t profitable. By acting proactively on that uneasy feeling, you can break the financial accident chain before it breaks you.
Dan Wyson, CFP® is a long running national financial columnist, author of several books and CEO/Founder of Wyson Financial/Wealth Management 375 E. Riverside Dr. St. George, UT 84790 – 435-986-9525 Securities and Advisory services offered through Commonwealth Financial Network, member FINRA/SIPC, a registered investment advisor.
