Several considerations will influence who you hire to manage your investments. You want someone who has experience. You want someone who works for or runs a reputable business. You want someone you can trust. You also want to look at information regarding the returns and losses on their various funds in recent years so that you maximize your returns.
Some investment professionals will take your money for a fund that promises high levels of return but offers little in the way of transparency regarding where they invest your money. If the prospective returns on an investment are too good to be true, it could very well be a Ponzi scheme.
Ponzi schemes are a form of investment fraud. They promise large returns and actually produce them for at least some clients before costing most people everything they invested in the scheme.
Some investment professionals don’t actually invest money at all
Lack of transparency with how a fund or investment firm operates is a big red flag. Not confirming what or who they invest with might mean that they don’t invest at all. A Ponzi scheme involves a professional taking money for investment and then using those funds for their own benefit or to make payments to other investors that they will claim represent returns on an earlier investment.
Such systems can be lucrative in the short run, but inevitably, those who are late to join the Ponzi scheme will likely see no returns at all. Investors who try to pull out their money may eventually discover that there are no assets for them to claim.
Careful research can limit your risk, but even otherwise legally-compliant professionals sometimes engage in unscrupulous and fraudulent behavior. If you have been the victim of investment fraud, you may need to consider litigation as a means of recouping some of your losses.