3·15 Investigation | Identifying Illegal Investment Advisory Traps: Investor Pit-Avoidance Guide is Here

Editor’s Note: On the occasion of the 3.15 International Consumer Rights Day, the securities investment advisory industry is facing a rigorous regulatory review.

Since 2026, a series of regulatory fines have been issued, representing a concentrated effort to address long-standing issues within the industry. They also reflect deeper problems in the trillion-yuan investment advisory market, where “performance outweighs compliance.” From investors’ pain points—such as “paying upfront for ‘limit-up miracle stocks’ and getting trapped at high prices”—to the exit of seven institutions over four years, the market cannot help but ask: What is the root cause of industry chaos? When will the cleanup pain end? What is the path toward standardized transformation?

In response, Securities Times has launched the “Investment Advisory Industry ‘3.15’ Survey” special report, engaging with leaders and experts from multiple advisory firms to explore ways to restore industry integrity, promote compliant development, and effectively protect the legitimate rights and interests of hundreds of millions of investors—ensuring that “trust is truly safeguarded.”

Faced with a wide variety of marketing tactics in the market, ordinary investors often find themselves in a dilemma: on one side, tempting promises of “guaranteed profits” and “insider information”; on the other, frequent reports of institutions being fined.

How can investors distinguish truth from falsehood in this chaotic market and choose truly trustworthy advisory services? Securities Times and China Securities Journal interviewed several industry leaders and experts, who offered practical advice.

The first prerequisite for choosing an advisory service is to verify whether the provider has legitimate credentials.

You Xin (pseudonym), head of a Shanghai-based advisory firm, said investors can verify through official regulatory channels whether the institution is a licensed securities investment consulting firm registered with the China Securities Regulatory Commission (CSRC), and whether the staff hold valid securities investment consulting licenses. Any advisory service provided by unlicensed institutions or personnel without proper credentials is illegal.

Hong Shang (pseudonym), head of another Shanghai advisory firm, also advised investors to carefully check through the China Securities Industry Association’s official channels whether the firm has the necessary business qualifications and whether its staff have completed professional registration. The key principle is to “verify credentials first, understand the core, and reject temptation.”

Tian Lihui, Dean of the Financial Development Research Institute at Nankai University, further emphasized that investors should not only check the qualifications of the institution and its staff but also pay attention to penalty records, which are fundamental indicators of an institution’s compliance level.

After verifying credentials, investors need to develop a keen eye for identifying speech traps. Promises like “guaranteed profits,” “super-high returns,” or “insider information”—these enticing claims—are often signs of fake advisory services.

You Xin pointed out that any promise of capital preservation, high returns, guaranteed profits, or insider tips is false marketing. Hong Shang recommended that investors remain skeptical of such claims and stay far away.

Tian Lihui warned that those who excessively showcase profit screenshots often hide significant risks. Legitimate advisory firms provide ongoing support and logical analysis, not “wealth codes.”

After filtering out illegal institutions and false claims, how can investors select truly high-quality services from compliant providers? This requires looking beyond marketing appearances to understand the core value of the service.

You Xin highlighted three key dimensions: First, examine the service logic. Quality advisory firms focus on asset allocation, risk control, and long-term value investing, rather than merely recommending stocks or hyping short-term hot topics. Their plans should align with the goal of steady family wealth growth over the long term. Second, assess risk matching. Professional firms evaluate investors’ risk tolerance and needs through standardized processes, offering suitable investment plans without pushing products beyond the investor’s risk level. Third, evaluate professional output. Reliable advisory firms consistently produce substantive content such as market research reports, investment strategy analyses, review sessions, and investor education, supporting decision-making with expertise rather than just marketing language.

Tian Lihui summarized that investors should build a “firewall” from three dimensions: verify institution and personnel credentials and penalty records (the basic bottom line); scrutinize contractual exemption clauses, especially any guarantees of capital preservation; and distinguish service content—legitimate advisory firms provide ongoing support and logical analysis. Only by doing so can investors avoid traps in a complex market and select truly valuable advisory services.

Layout: Luo Xiaoxia

Proofreading: Su Huanwen