How is Bad Advice Different Than a Scam?

One key difference is bad financial advice is legal. Investment scams, such as Ponzi schemes, are illegal. There is no way regulatory agencies can mandate high quality financial advice that is always in the best interests of investors. In fact, regulations that impact the quality of financial advice are non-existent.

Bad advice means your assets under-perform compared to good advice that produces higher returns. If you are unfortunate enough to invest in scam, there is a high probability your assets will disappear.

Bad advice is impacted by the risk associated with investing in the securities markets. Most scams do not invest assets they steal assets. Therefore, your risk is not the securities markets, it is the products and the company that produced and sold the products to you.

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