7 Ways to Avoid Financial Product Scams

These strategies will help you to avoid being taken advantage of.

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Whether it's an investment opportunity, a way to contribute more money to a tax advantaged account, or even a tax reduction tip, we are constantly bombarded with retirement advice from people around us. Some recommendations, like save as much as you can for retirement, can be sage advice. But other pieces of advice might only work out for the person trying to sell you a financial product. Here are seven ways to pick out the gems from the duds.

Never say yes right away. You can get caught in the moment and make emotional decisions that you will regret later. Whenever you hear about a new idea that promises to improve your retirement prospects, never decide to make the move immediately. Give yourself some time to think things over, and see if it makes sense for your own circumstances first.

Be incredibly skeptical. If everyone is saying how great a new investment opportunity is, ask lots of questions. Don't be pressured into a decision until you are 100 percent satisfied with the answers.

Ask the same question a couple of different times, in different ways. Many people are trained to answer your question in a way that may appeal to you. By asking at different times and in different ways, you will be better able to decipher the sales pitches and find out whether the solution offered can help you. You will also give yourself a chance to better understand what you are getting yourself into because you will often get more information out of the conversation when you ask for the same information repeatedly.

Figure out the other party's intentions. Will your decision have any financial consequences for the other party? Not everyone is trying to intentionally scam you, because there are lots of people who mean well. Still, it's almost impossible for the advice to be free from bias if someone has the potential to make big commissions depending on how you act.

Find a sounding board. It could be your spouse, your CPA, your investment adviser, or all of these people. The more people you can discuss possible investment decisions with, the more information you will obtain, and the better prepared you will be to make an optimal decision.

Find at least one more alternative. Once you decide an investment is something you'd like to seriously consider, compare it to other similar opportunities. There is a chance that another company is offering a more competitive solution that will work better for you. Even if you find that the original solution is the best, the process of finding an alternative will give you more opportunities to figure out the appropriateness of the advice.

Thank the person who gave you the suggestion. If you do all your homework and still find that the advice is worth your while, let the person who passed the information along know that you appreciate it. You should be OK with people making money off of your decisions as long as both of you are benefiting from it. In fact, you should encourage this, because if you are always the only one benefiting in every way, then the suggestions will eventually stop and you will end up losing out.

David Ning runs MoneyNing, a personal finance site that shares money moves you can make to significantly increase your chances of having a comfortable retirement. He likes to share simple changes that anyone can make, such as picking the best online savings account and figuring out whether a 0 percent balance transfer credit card makes sense.