FRAUD WEARS MANY faces. But depending on who you believe, potentially the most unusual is that of Jeanne Louise Calment. For years, the French-born Calment, who claimed to have been born in 1875, was celebrated as the world’s oldest person. By the time she died in 1997, she would have been 122— if she’d been telling the truth. New research, however, casts doubt on Calment’s claim.
The real story, it turns out, may be that Calment actually died many decades earlier—in the 1930s. Her daughter, Yvonne, then allegedly faked her own death and simultaneously assumed her mother’s identity to avoid inheritance taxes. The Calments were wealthy landowners and inheritance taxes at that time in France were quite steep.
It’s an odd story and we may never know the truth. But it serves as a reminder that there’s often more to a story than meets the eye—and that includes financial stories. Here are three tips to help avoid money missteps:
1. Be skeptical. When it comes to financial fraudsters, there are often red flags. But because these fraudsters offer the prospect of huge profits, investors often ignore the warning signs.
Take Bernard Madoff. Many in the financial community were skeptical of his track record. One individual even presented evidence to the SEC, proving that Madoff had to be lying about his investment strategy, because it was mathematically impossible. But you didn’t even need to understand the math to be suspicious of someone who claimed steady profits, month after month, year after year, without ever incurring any losses.
The lesson: If it seems too good to be true, it probably is. When someone claims to be 122 years old but looks decades younger, you should trust your eyes, rather than someone else’s fantastical claims.
2. Verify. In the early days of the Internet, there was a famous cartoon in which a dog is sitting at a desk, typing on a computer. He says to a dog by his side, “On the Internet, nobody knows you’re a dog.” That was more than 20 years ago.
Today, it’s even harder to know who’s behind the information you read online, especially with ubiquitous “share” buttons that facilitate the spread of information. This isn’t limited to intentional misinformation. Today, anyone with a computer and a website can publish information online. While this has many benefits, it also means that the valuable roles of editor and fact checker are no longer part of the process. For that reason, it’s more important than ever to double check information you read before using it to make financial decisions.
3. Avoid comparisons. It can be awfully hard to avoid comparing ourselves to friends, neighbors or peers. When I was in my 20s, I remember a friend asking me why I was still living in an apartment and hadn’t yet purchased a “big boy house,” as he called it. It was an insulting question at the time, but also revealing. The reality: People judge other people based on simplistic, outward appearances—what type of car folks drive or the size of their house.
And yet, as research has shown, there’s little correlation between these outward appearances and someone’s actual financial health. In fact, there is sometimes a negative correlation. Your friend driving that new Mercedes might indeed be a multi-millionaire—or he might just be playing a part in his own fabricated story.
Adam M. Grossman’s previous articles include Out of Stock, Say No to Mo and Playing Nice. Adam is the founder of Mayport Wealth Management, a fixed-fee financial planning firm in Boston. He’s an advocate of evidence-based investing and is on a mission to lower the cost of investment advice for consumers. Follow Adam on Twitter @AdamMGrossman.