Your Financial Advisor Promises a Guaranteed Return — That Should Trigger These 5 Questions

A guaranteed return can sound simple, but investors should check exactly what gets guaranteed, who provides the guarantee, what conditions apply, and what risks remain – Shutterstock

A financial advisor who promises a guaranteed return has just handed a cautious investor a very useful reason to slow down. The word “guaranteed” sounds reassuring, but it leaves out the details that determine whether the promise has real financial backing.

The Securities and Exchange Commission warns that guaranteed high returns with little or no risk can signal investment fraud. That does not mean every product containing a guarantee represents a scam. Certain financial products can include contractual guarantees, but investors need to know exactly what those guarantees cover and who stands behind them.