By James MacTavish at Alberta Securities Commission
This article was originally published on the Alberta Securities Commission’s (ASC) investor education website CheckFirst.ca. The ASC is the regulatory agency responsible for administering the province’s securities laws. It is entrusted with fostering a fair and efficient capital market in Alberta and protecting investors. As a member of the Canadian Securities Administrators, the ASC works to improve, coordinate and harmonize the regulation of Canada’s capital markets.
Investing today has never been more accessible. With the advent of electronic trading platforms in 1992, the proliferation of internet accessibility in the mid-to-late 90s and the growing adoption of mobile devices in the early 2000s, investors now have access to a variety of easy-to-use and intuitive investment applications on their mobile devices.
While these technological advancements have made investing more accessible, investors need to remember to conduct thorough research on any investment app they plan to use. Specifically, investors should consider their fee expectations, service needs and most importantly, if the app is credible and registered. Below are three steps to assess if an investment app is legitimate and suitable for you.
1) Registration is essential, even for investment apps
Not all apps offered through the app marketplace on our mobile devices are credible and such apps can expose you to the risk of fraud. It is important to always to check the registration of any investment advisor, firm or platform to ensure they are working in compliance with regulatory requirements. Securities professionals and firms dealing in securities are required to register with securities regulators, and this requirement extends to the investment apps they offer. Checking registration enables investors to validate that the investment app they plan to use is qualified and permitted to sell securities. Ignoring or skipping this step and using an investment app offered by an unregistered firm may not provide you with any of the typical investor protections that may exist with a registered one. For those interested in investing in crypto-assets, check the registration of any crypto investment app that will hold custody of your funds or crypto-assets. Not all crypto-assets are deemed securities, but if an investment app holds your financial assets, it’s strongly recommended you only use one that is registered. To verify the registration of an investment app, visit CheckFirst.ca/check-reg brought to you by the Alberta Securities Commission.
2) Avoid the telltale signs of fraudulent or suspicious investment apps
Unfortunately, the ease and widespread appeal of mobile banking and investment apps is not lost on fraudsters looking to capitalize on eager investors. Fraudsters often create investment apps that imitate legitimate financial institutions and registered investment firms and promote them through online advertising or one-on-one interactions with targets. You can visit the CheckFirst Spotthespoof.ca website to learn more about these imitation websites and platforms. Fraudsters also leverage the considerable market interest in crypto-assets to position their fraudulent investment apps as an easy way to invest in digital coins and crypto projects.
Remember these tips to avoid fraudulent investment apps:
- Avoid unsolicited offers to download an investment app from those you meet online, like self-promoted experts, new acquaintances or love interests.
- Check that the investment app you plan to download and use is the correct one offered by a registered financial institution or firm.
- Be wary of investment apps with limited or broken functionality, spelling mistakes and odd in-app requests like wire transfers.
- Conduct research online to see what others say about the investment app and if any red flags of fraud are found. Visit Checkfirst.ca/red-flags to learn what to look for.
3) Understand if the investment app is right for you.
Once you have conducted these steps, it’s important to review the fees and charges of your chosen investment app. Investment apps and platforms offered by financial institutions and firms do not have the same costs or services. Often the fees associated with trading, currency conversions and account maintenance will vary between them. Review the fee structures and the services offered and choose one that best fits your investing style, needs and expectations.
Investment apps have ushered in a new era of convenience for investors but still require you to take your time to review and consider which option is best. Before you hit the download button, remember these steps to help you find a suitable and registered investment app for your needs.
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CheckFirst.ca is your go-to resource for the world of investing. Develop your investor knowledge, understand the risks and make informed and suitable investment decisions with unbiased resources and information brought to you by the Alberta Securities Commission.