And how were these investments allowed?

There is no excuse for fund managers putting together investment funds and then misrepresenting them to the public nor are there any excuses for financial planners for not fully explaining the risk attached to these investments.

Or what is equally likely, the financial planners involved choose not to take the time to fully understand these products themselves, preferring to just concentrate on the new fees they would earn from this work.

Sadly though, it seems it is the same old story of ordinary people believing you can achieve significantly higher returns without taking on significantly higher risks by being ‘clever’ and connecting with the right people.

While anyone can be taken advantage of in these types of scams, in my experience there are two types of people with superannuation funds who are particularly vulnerable to being led astray.

There are people who suddenly find themselves in well-paying jobs and are determined to make that extra money in their pocket count. They then start proactively looking for a bigger and better investments and ignore the added risks that go with them.

This means even when these people are cold called by a complete stranger, it is easy for the caller to push all the right buttons, make outrageous claims about being a clever investment and so, quickly succeed in getting them on the hook.

The caller simply tells them what they know they want to hear and the person listening suspends all commonsense, ignores the fact they don’t know this person who is speaking to them at all and listens to them simply because they want to believe.

The other group of people are those with modest amounts in super savings who are close to retirement. They think they have left it all too late and it’s like they decide to take one last roll of the dice, in a double or nothing mindset.

That’s how these scammers, and make no mistake these people were scammers, cold called people and got them on the hook by just telling them what they wanted to hear. Even if there is no basis for those comments.

If you fall into either of those two ‘at-risk’ groups, you need to be extra cautious. Superannuation savings are precious and for most people irreplaceable. You need to take time and be careful what you do with them, or they will soon disappear.