How to spot a legitimate investment company - Keeping your funds safe online
26 February 2018
In 2017, Kiwis lost a combined total of $10.1m dollars in reported scams online, according to Netsafe – NZ’s online safety organisation. Of that number, the single biggest loss was an investment company scam which resulted in $480,000 being defrauded .
At PMG our vision is to be NZ’s most trusted funds and property managers, here are our tips on how to sort the wheat from the chaff:
- The Manager of an investment scheme should be approachable, so speak to them directly about the investment(s) they offer.
- If you have been targeted on or offline by an unfamiliar investment opportunity, do your research about the entity and the directors behind it first. If they don’t have a website or it’s very basic (i.e. does not look professional), that’s your first red flag that it is not legitimate.
- If you know them, search the names of the directors and management team in Google, LinkedIn and / or Facebook, to give you a level of comfort these individuals are real.
- If an investment firm or scheme does not comply with any of the following points then you should question the providers/managers and the offer. You can also check with the regulating body, which in our case is the Financial Markets Authority (FMA).
- Is the investment firm licensed by a regulatory body? The FMA provides a database of licensed product providers, funds managers, and investment schemes that investors should check.
- Does the firm have a statutory supervisor in place? Most investment providers are required to have one.
- Does the firm or scheme follow stringent anti-money laundering and counter-financing of terrorism rules which include identity verification and proof of the source of funds for new clients?
- Does the manager issue a product disclosure statement (PDS) or information memorandum (IM) for all retail and wholesale investment offers and /or schemes which are required by the FMA?
- Does the scheme manager have audited financial accounts? If so, check with the accounting firm who did them, to ensure they did indeed prepare the accounts for the scheme.
- Will the provider or manager provide the names and contact details of existing investors who have invested with the firm for a substantial period of time? PMG would happily do this.
- Does the manager offer a registered dispute resolution scheme, like PMG provides?
- How long has the scheme manager been in existence and how are they are remunerated? i.e. there should be an incentive linked to the scheme’s performance and track record
- What level of transparency does the manager provide on the performance of the investment(s)?