A disturbing new alert was released by the SEC, Investor Education and Advocacy (OIEA). It warned feds of the potential for “Scam Artists” focused on federal retirement savings. The alert outlines a recent enforcement action.
According to the alert, the enforcement action alleges that it identified individuals that were engaged in falsely presenting themselves as being approved by, affiliated with or somehow endorsed by the federal government, then coercing feds to invest with them.
According to the SEC allegations, these defendants sent federal employees reports and misleading recommended investment options, then they allegedly failed to disclose that these “options” involved investing with a third party that had no government affiliation.
A Cautionary Tale
With the markets roaring upward and larger than ever TSP accounts and greater numbers of baby-boomers retiring, federal employees should be on their toes.
Recently Mike (not his real name) contacted our offices with an eerily similar account. Mike is a soon to be retiring FERS employee. He described a personal experience he had concerning a presumed huckster.
Mike began by explaining that a man he had never heard of contacted him directly by calling Mike’s personal phone number. Mike shared that it “appeared” this person was somehow government affiliated.
They convinced Mike to set up a meeting in Mike’s home. The gentleman wanted to talk about Mike’s “acceptable” retirement investment options. The person seemed to know a lot of personal information about Mike and his wife. So, Mike was comfortable enough to schedule the meeting, convinced that this person was somehow associated with Mike’s employer, TSP or OPM.
Initially, Mike didn’t see any glaring “red flags” concerning their scheduled meeting. Yet, to Mike’s wife (also a federal employee), something just didn’t feel right.
As a matter of course, Mike contacted his HR department to ask what he should have ready when this person showed up. His HR department immediately expressed to Mike that they had no idea why anyone associated with the government would call him to schedule such an appointment.
From the reaction of his HR department, Mike and his wife began seeing numerous “red flags.” They now assumed this impending visitor might be something other than who they claimed to be. The couple called this stranger to perform a little more vetting before inviting him into their home.
They reached this mystery man and began asking a series of (HR proposed) questions. When these simple questions began to result in hazy and unsatisfactory answers, the appointment was canceled.
One last attempt – The unknown man persuaded Mike to “think about it” and call back. Mike kept his word and called the person’s number less than 3 weeks later only to find it was no longer in service.
Sounds like this was potentially a fortunate turn of events for Mike. One has to wonder how many others would have fallen for this possible ruse?
Tips for Screening for Qualified Financial Advisors/Firms
When considering options for retirement planners or investment opportunities, here is a list of tips that may save future regret:
- Don’t set up a meeting with anyone who has called you, sent you an email or mailed materials to you unless you first requested it.
- Be protective of your personal information. Remember, feds have been (and still are) a target for identity thieves. In 2015, millions had personal information hacked from the Office of Personel Management (OPM).
- The Federal Retirement Thrift Investment Board (FRTIB) will not contact feds requesting personal information. (The FRTIB is the agency that administers the TSP.) They will not ask feds to produce accounts numbers, SSN’s, passwords, PIN’s, etc. The FRTIB will not endorse or contact federal employees about any investment opportunities, nor will they support “third parties” that provide investment services.
- If someone reaches out to you via email, phone or snail mail, no matter how official they appear to be, DO NOT provide them any personal information. Instead, contact that person’s indicated agency and confirm they are who they say they are. Note: That doesn’t mean that you should call them on a number they provide you. Look up their agency and call the agency’s official number you find through your own research.
- If individuals claims they or their private company are affiliated with the government, call the SEC’s investor assistance line at 800-732-0330.
Attributes to Look for in a Potential Financial Planner
Prudence is always, well, prudent. There are a plethora of well meaning and competent advisors out there. I may be biased, but I believe there are vastly more good advisors than bad, yet it is wise to verify you are speaking to one of these individuals before you provide any personal information or move your hard-earned money into their care.
For retired or soon to be retiring federal employees, it may be shrewd to find an advisor that:
- Focuses ALL of their advisory efforts on assisting federal employees. This can usually be ascertained very easily by viewing the advisor’s If the site lists federal employees as only one group they work with, they are not focused on feds and do not fit the desired description.
- Has a strong understanding of federal retirement benefits. Federal benefits are unique and require more than a passing or occasional involvement by an advisor. Inadequate or incomplete knowledge in this area may lead to a lack of proper attention to the development of a retirement plan.
- Has a significant amount of investment experience (I generally suggest 10-years or more).
This latest alert is just the most recent evidence that federal employees need to be aware of deliberate and designed threats to their financial futures. If you are going to work with an advisor, you should seek them out; do not acquiesce to those that seek you out. Remember this straightforward little Factoid – No one cares more about your financial future than you do!
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. Investing involves risks, including the loss of principal. No strategy assures success or protects against loss. Silverlight Financial, Infinity Financial Services and its affiliates do not provide tax, legal or accounting advice. This material is not intended to provide, and should not be relied on for tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction. For a list of states in which I am registered to do business, please visit www.silverlightfinancial.com.
