Most people, especially retirees who are accustomed to banking for many years, are well aware of what a certificate of deposit, or CD, is and how it works. While they don’t typically yield high returns, these investment vehicles are some of the safest investments an investor can make. The principal is guaranteed to be returned at the end of the term, and you get paid interest while you wait.

Since the financial crisis, however, CDs and savings accounts aren’t producing the returns that they used to, which has caused them to become less desirable savings vehicles. The current prolonged low interest environment is causing many savers to seek better returns elsewhere, which only compounds the problem because of the higher risk associated with higher returns. Unfortunately, Wall Street has picked up on this trend and has started marketing a new type of CD called a structured CD. This specialized CD provides better returns on the surface, but what is hidden in the fine print might shock you.

Wall Street has decided to take something that is already branded as being safe and sell it with extra bells and whistles that rack up big fees for them (sometimes as high as 3%) while increasing the risk for the investors. A recent Wall Street Journal article noted how one investor, a 79-year-old widow, was horrified to see her $100,000 investment immediately drop to $95,712 after incurring upfront fees. The fees had been disclosed in the 266-page agreement that she signed when investing in the product, but – as many investors would do — she didn’t read all 266 pages of the document. Unfortunately, she blindly trusted the bank that sold her this lump of coal.

The real travesty here is the fact that studies have shown that almost all of these products perform worse than standard CDs. In fact, a study of 118 structured CDs that were issued at least three years ago found that  only one-quarter posted returns better than those of an average five-year conventional CD.  To make matters worse, as of June 2016, roughly one-quarter of them produced no returns at all. At least your standard bank CD doesn’t charge you a fee to open it and most perform better than their fancy structured CD cousins.

So with new products like this popping up every day, how can you protect yourself? Well, here are just a few tips that will help you to not get yourself into an investment trap.

• Make sure you’re clear on the costs, fees and performance promises tied to any investment product.

• Always question products that promise high returns accompanied with low risks. These are classic indicators of Wall Street Scams or Ponzi Schemes.

• Focus on investing according to an investment plan that has been prepared alongside your trusted financial advisor. Having a plan and tracking progress makes you less apt to chase returns in riskier assets.

The world is saturated with these kinds of financial products. Using some standard common sense, sticking to a well-designed investment plan and working with a financial advisor on a regular basis can help you to avoid scams like the one mentioned here. Navigating the financial landscape can be difficult. As a rule of thumb, if something sounds too good to be true, it might just be.

Most of us check our bank accounts regularly, are diligent in the daily management of our checking accounts to make sure that no money is missing and that we can pay our bills each month. It would be unusual for someone to forget that they had a checking account out there that hadn’t already been rolled into their new checking account; however, sadly, it is all too common for people to lose track of an old retirement account.  

It is estimated that today’s millennials are job-hopping every 3 years on average. With so many moving parts that come into play when jumping from job to job, it can be surprisingly easy to forget to rollover a 401(k) or other retirement savings plan. Millennials aren’t the only ones who lose track of their retirement savings. More and more soon-to-be retirees also can’t recall where they stashed their money years ago. This presents a serious problem, as forgotten retirement savings can be subject to high fees or inflation or even become seized by the state if they are abandoned for too long.

What Happens When Your Plan is Forgotten?

Terry Dunne, of Millennium Trust Co., which handles 401(k)-to-IRA rollovers, estimates that more than 900,000 workers lose track of 401(k)-style, defined-contribution plans each year, illustrating that this is a far too common occurrence.

When the companies that administer your retirement plan can’t find you and are not successful in getting in touch with you, all of your invested money gets put into cash, which can then get eroded by fees and inflation. Worse, this causes investors to lose out on the opportunity for possible long-term gains in the market while the investor doesn’t even realize they have lost money out there to be invested.

Do Employers Really Want to Find You?

There is virtually no incentive for financial companies holding 401(k) accounts or pensions to find you. While your money is sitting there, they can collect fees. If they alert you to the issue, you may move your money elsewhere.

Tom Reeder of the U.S. Pension Benefit Guaranty Corp. (PBGC) said employers often just “go through the motions” of finding beneficiaries. When so-called missing accounts are transferred to the PBGC, the agency can often find those participants immediately with modern search tools.

“All employers are not as eager to find these people as they should be,” he said.

The U.S. Department of Labor seems to agree. In January it said it was expanding an investigation of large pension plans failing to locate participants.

What Can You Do to Locate an Old Plan?

While it is essential to be diligent in managing and moving money into current plans, these things happen. And when they do, here’s what you can do about it:

Unfortunately, there is no central, comprehensive repository where you can locate lost 401(k)s or pensions, but there are a few places where you can start:

• Contact Former Employers: The best place to start locating an old retirement plan is to contact your old employers and see if you ever participated in a 401(k) plan and, if so, how you can gain access to it.
• Contact the Plan Administrator: Sometimes former employers cannot be found, whether due to a business closure, merger or relocation. If this is the case, and you still have an old 401(k) plan statement, see if you can locate the contact information for the firm that administered your plan. If you don’t have an old statement lying around, try to locate the Form 5500 – which most plans require participants to complete — on www.freeERISA.com. This form will reveal the contact information of your plan administrator as well.  
• Search Online: Congress may be in the works to create a “retirement seek-and-find”, a complete searchable database of abandoned retirement accounts. In the meantime, the U.S. Department of Labor offers an Abandoned Plan Database, which shows if your plan is in the process of being terminated, as well as the name of the Qualified Terminator, who you can contact about your account. There is also a National Registry where some employers list missing participants as well.
• Visit a Pension Counseling Center: More than 30 states offer free counseling resources that help individuals reclaim retirement benefits they have earned.  To find a free counseling resource near you, visit www.pensionrights.org/find-help.

Roll Old Plans into Current Ones

One of the easiest ways to avoid losing track of your retirements accounts is to simply roll them into the plan with your new employer. It may also be beneficial to open a traditional IRA and transfer your 401(k) money there to keep track of it in one place, which also opens up the amount of investment options you will have. Before taking either step you should evaluate the fees and investment options of each.

If you’re dealing with a pension, make sure you keep a record of how to claim that pension when you leave the company and store in a safe place for future reference. This will increase the odds of not forgetting about a pension that you have and also cut down on delays in receiving your first pension payment.

Keeping track of your retirement plans isn’t hard and should be done with as much diligence as your checking accounts. Don’t become one of the 900,000 people who don’t know they have money sitting out there somewhere waiting for them to claim.