If you’re over the age of 40, you’ve probably received at least one of these in the mail: an invitation to a “free,” educational retirement seminar at a fancy steakhouse or another white-tablecloth restaurant. You know – the ones where the friendly offer comes somewhere between the delicious entree and the fabulous cheesecake? The advisor asks: Do you want to have a comfortable retirement? Earn high returns with a low amount of risk? Receive tax-free income? Well, here’s the secret to wealth without risk. It’s called… (insert product name here).
In reality, it should be called “too good to be true.”
While some advisors and retirement-planning specialists do offer nuggets of good information during these lunch and dinner seminars, they’re not necessarily doing it as a public service. As FINRA pointed out in an Investor Alert in 2013, the point of these kinds of seminars is to recruit clients and sell financial products that may not be appropriate for the potential investors in attendance.
Some investors have been worried about ongoing market volatility after they lost big chunks of their retirement savings in the 2008 recession. Others worry about outliving their money, and without a pension, they’re looking for a stream of income in retirement. Still others just want higher returns during this time of low interest rates. I get it – and I support people who want to learn about how best to manage their finances. But in the case of those “free” lunch or dinner seminars, the education could come at a price for those who don’t ask the right questions, or who feel an obligation to invest after enjoying a complimentary meal.
As a fee-only fiduciary, and chairperson of the Michigan Association of CPAs’ Financial Literacy Task Force, it pains me to see people paying commissions they don’t realize they’re paying, as well as hefty surrender charges and other fees that come with some of the financial products – often indexed annuities -- sold at these educational seminars. These annuities promise both investment growth and principal protection, and with the appropriate riders, a guaranteed income stream for life. All that may sound good, but it’s not quite that simple. Indexed annuities are complex products whose investment returns depend on how the insurance company tracks changes to the index value. Investors may be surprised to find that their annuity limits the returns they can receive, even if the index performs well. For example, if the index had returned eight percent, but the cap on your annuity is two percent, you’d only receive two percent!
My advice to those lured by the promises made at lunch and dinner seminars is to understand what you’re getting into. If an invitation looks intriguing, find out who’s sponsoring the event – is it the advisory firm or a product provider? In addition, check the background of the presenter and/or the firm and sponsor. FINRA’s BrokerCheck and the SEC’s Investment Adviser Public Disclosure website can tell you whether a firm or an individual has received sanctions or other regulatory actions for misconduct.
If you decide to attend, don’t opt to make a purchase on the spot. Instead, review the information later with someone who is knowledgeable, and whose opinion you trust. Once you leave the seminar, you can expect at least one follow-up call from the presenter, and any high-pressure sales tactics you receive may come during that time. If you don’t intend to purchase, remain calm but firm in your resolve, because the caller likely has prepared arguments to address your concerns.
At AMDG Financial, we are committed to placing the interests of our clients first, and are always glad to answer your questions and discuss your investment goals. If you’ve received an invitation to a “free” lunch or dinner seminar, ask us about it. We’ll give you the straight scoop.