Behavioral strategies for preventing financial scams

Ginelli: Urgency works for scammers because feeling rushed hinders your ability to think things through. Scammers know that if they can get you to act fast—make you click on a link, send money, or share personal details, for example—you’re much less likely to pause and question what’s happening. As Andy mentioned before, fraudsters play on emotions to take reasoning out of the activity for the victim, and speed helps them achieve that.

Reed: Technology has enabled scammers to look and sound real, especially with spoofed phone numbers and email addresses. I think the key, as John said, is that scammers try to create a sense of urgency. But when you think about it, there is no real urgency to a scam. You can postpone reacting to a scam for the rest of your life, and you’ll be better off. So take a pause, sleep on it, come back. Reread the email with fresh eyes or listen to the voicemail the next day, when you’re well rested. With time, it’s not going to be as emotionally provocative. From there, you can make a better decision.  

Reed: In general, if your family member or client is making any sort of consequential financial choice, being in the right state of mind is like having a superpower. The reality is that people are not themselves when they’re stressed out. Stress distorts our sense of the choices we have, and it can influence how much risk we take. You want people to be in an even-keeled emotional state: not too excited, not too scared. Even better if they’re feeling calm, gratitude, or pride, since those feelings foster mindful decisions that favor long-term outcomes. All else equal, being in the right frame of mind is probably going to lead to better choices, whether it’s dealing with scammers or making everyday financial choices. How much to save and invest, whether to make a trade—you don’t want to do any of these things if you’re not in the right state of mind.

Ginelli: Grounding themselves and keeping communication open with a trusted person when a strange situation pops up is important. It’s like getting a second opinion.

Ginelli: From my experience, especially with scams where the fraudster is playing the long game, their intent could be to first keep the target on the phone for a prolonged period so they can make a social connection the client may not regularly experience. Fraudsters are well trained in the art of coercion, and they use that to build trust and a relationship with their victims.

Another tactic is to set up a scenario where there’s a problem that needs addressing—implying that if the victim doesn’t help them solve it, things will get worse. Speed and urgency come back into play here.

Reed: Over time this erodes autonomy by making the victim feel like it’s their choice, when really they were coerced without realizing it. As John mentioned, there are two methods of persuasion. On one side, there’s the befriending method—more of a soft touch. The scammer pretends to be your friend. On the other side is intense fear; they try to terrify their victim into action. The shared thread is emotion. The scammer is trying to short-circuit reason and drive an immediate emotional reaction.

Reed: At the most basic, neurological level, it comes down to dopamine. Dopamine is a chemical in your brain that’s triggered when we anticipate or experience rewards—for example, winning the lottery. You get a little burst of dopamine that makes you feel good when you win—and an even bigger burst when there’s risk involved.

Additionally, the older we get, the more attention we pay to positives in our environment and less to negatives. Why? Because we’re trying to feel good in the here and now and maintain emotional well-being. It’s easy to miss red flags when you’re looking for green ones.

Reed: One of the most effective strategies is creating a strong safety network. This can include trusted family members, close friends, or a professional advisor who can provide a second opinion when something feels off. Having this system in place ensures that dialogue remains active and prevents decisions from being made in isolation.  

Ginelli: The most effective behavioral interventions focus on engagement, awareness, and communication. It’s about how much investors interact with their financial services firm and those in their lives, and how willing they are to use that safety network that Andy mentioned. Investors who maintain regular touchpoints with those they know and trust are generally at lower risk of falling victim to scams.

Also, as fraud is on the rise, staying vigilant and informed about common scams is essential. Before making major financial decisions, share any concerns with trusted individuals to avoid costly mistakes. Create and maintain that small village. Think about the last thing a scammer would want you to do.

Reed: Exactly. The last thing the scammer wants you to do is the first thing you should do. 

Note: This content was edited for length and clarity.