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Most of the seniors that contact me about investments they regret
admit they’ve purchased them as a result of a free ‘educational’
lunch or dinner seminar. They go expecting to have a nice meal with
other seniors ‘on the house’, and end up losing their shirt in some
kind of investment scheme.
The problem has become so rampant that the Senate Special Committee
on Aging recently held a hearing on the subject, as well as advisors
that use dubious designations such as "senior financial investment
specialists" to gain seniors’ trust.
An Associated Press article entitled ‘Senate Panel Eyes 'Free-lunch'
Senior Scams’ quoted Sen. Herb Kohl, the panel’s chairman as saying,
“Seniors should be able to trust the people who invest their money.”
Indeed, they should.
The article makes a disturbing point: “People 60 and older make up
15 percent of the country's population but account for an estimated
30 percent of fraud victims. With baby boomers swelling the ranks of
retirees, regulators expect a rise in financial scammers preying on
them.”
Seniors need to realize that these “free” seminars are not as free
as they seem. The entire purpose of these marketing endeavors is to
get you to buy something. That may seem obvious, but how many
seniors that attend these freebies actually plan in advance to
liquidate their life savings and put it all into an investment they
don’t really understand? And yet, multitudes of seniors do this
every year.
Don’t get me wrong. Not every financial seminar out there is a scam.
But there are a number of seminars that go way over the line, using
high pressure tactics, erroneous information and outright deception
to get a hold of your money.
Here’s the thing to remember about most seminars. The cost to do a
typical seminar for
100 attendees can easily reach $5000. That price tag includes buying
the mailing list, buying the sales pitch (very few write their own),
the food, renting the venue, etc. Now an advisor isn’t going to
spend $5000 if they aren’t fairly certain of making that much back
and more.
That’s why most seminars promote high-commission products with long
surrender periods. Otherwise, it wouldn’t be financially feasible to
use them. The advisor only needs a few sales to make it all worth
while.
Those who write the sales pitches for these seminars are masters at
pushing your hot buttons. They use the two chief motivations every
investor has: fear and greed. Everyone fears losing the money
they’ve worked a lifetime to achieve and no ones wants to be forced
to lower their standard of living. Perhaps even more, we long for a
shortcut to wealth, some inside secret others can only dream about.
The main goal of a seminar is to get you to make an appointment. The
appointment isn’t presented as a sales event; it’s presented as a
no-obligation way for you get more information. What can it hurt? If
the presentation and the advisor are good, about 2/3’s of those at
the seminar will set an appointment. The advisor knows that there
should be a sale with at least 1 out of every 3 people he/she meets
with. For some, the ‘close ratio’ is much higher than that. It’s a
numbers game.
So should you attend these free seminars? In essence, they are like
those time-share deals where you get two free nights if you’re
willing to sit through the sales pitch. It’s very easy for people to
resist the time-share sales pitch. It’s much harder to resist an
investment-product pitch that’s presented as the best thing since
sliced bread.
If you do attend, I recommend that you not divulge any financial
information. Don’t set an appointment at the seminar. Waiting
several days or weeks will give you a better perspective. You’ll
likely decide not to make one at all.
Do research…lots of it. Don’t take their word for it. Check it out
independently. The advisor is biased and the information he/she
gives you will be, too. Find sources that tell you what’s wrong with
the investment. You must have all the information so you can make an
informed decision. Talk to several other advisors—all with different
approaches.
Is a free $20 dinner worth the risk of becoming the next fraud
statistic?
Nationally-syndicated financial columnist and Certified Financial
Planner® Jeffrey Voudrie provides personal, in-depth money
management services and advice to select private clients throughout
the USA. He’ll answer your financial question – FREE at
www.guardingyourwealth.com.
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