This article first appeared in Professional Adviser.

Investment scams are certainly not a new phenomenon, but they have never been more prominent or sophisticated than in recent times. Here he looks at three ways advisers can tackle fraudsters and their tactics…

Gone are the days when cold calls would be the primary go-to for fraudsters. Social media, financial influencers and the growing popularity of unregulated investments such as crypto have all opened up new avenues for attack.

Take MoneySavingExpert’s Martin Lewis, who’s now routinely forced to warn his followers against websites using his name and image to promote fraudulent investment opportunities.

Meanwhile, The Sun newspaper recently told the story of a 77-year-old RAF veteran who, having unknowingly invested in a cryptocurrency scam, lost £800,000 after the crooks tricked him into taking out loans and equity from his home.

With new tactics mushrooming faster than the industry and regulators can take steps to prevent them, the likelihood of us stamping out scams altogether is sadly looking very slim.

That said, there a number of things – from basic education to changing the way we talk about ‘conventional’ investment products – we can do to make scammers’ lives more difficult.

Keeping clients informed

Pretty much every adviser I know has ad-hoc conversations with clients about scams, but given the plethora of new methods coming to light in the current climate, having this on the agenda for regular meetings as standard would be a very good idea.

The aim here isn’t to scaremonger, but rather keep clients abreast of new trends to be aware of and to coach them on how to spot potential red flags as the landscape continues to evolve.

The focus shouldn’t just be on educating clients. If your firm already has materials on how to safeguard against scams, then making these available on your website and social media could increase the chances of an at-risk saver seeing this information before they making a devastating financial decision.

Be sure to include links to Action Fraud and the FCA’s ScamSmart initiative in any content being shared – this will help ensure those not using a financial adviser are obtaining support from a reputable source.

Showcase what ‘good’ investing looks like

As an industry we should without a doubt make clients aware of the risks linked to investing, but we must take care not to ‘counter-educate’.

There is plenty of advertising out there which warns against investment scams and potential losses, but this may not always be protecting people in the way it is intended. Scammers draw people in by focusing on the positives and talking about attractive returns that can be achieved with ease.

By giving the risks too much airtime, there’s a very real danger we could unintentionally play people into scammers’ hands.

With this in mind, advisers should push for the same amount of time and resource to be spent promoting the benefits of investing when it is done through an authorised business. Being clear with savers that regulated financial advisers are the ‘good guys’ will also open up more conversations about what makes a good investment, in turn helping investors spot red flags.

Make sure they also know where to check your credentials on the FCA register, again, giving them a safe place to identify between the ‘good guys’ and the scammers.

Make it easier for people to invest via conventional routes

Until we get to a point whereby people can invest a chunk of money into an ISA as easily as they can an unregulated investment, then scams are going to continue to be a major problem.

The fact that so many people – particularly the younger generations – are prepared to take a gamble on high-risk strategies without engaging an adviser is concerning, and is an issue advisers should work with the government and regulators on to try and resolve.

Ultimately, we need regulation that comes down on the other side and makes it easier for the public to engage with more conventional investment products and other aspects of financial planning – this will minimise the opportunities for crooks to draw people in.

There’s no catch-all solution for fixing the issue of investment scams, but by clubbing together to educate clients and drive more open conversations around what makes a good investment, we will come one step closer to combating fraudsters.