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Do you like being taken advantage of? I
sure don’t. In fact, I hate it! Worse, it seems like it is happening
more and more. Now, more than ever, it is buyer-beware. Read on for
some specific examples and to learn how you can protect yourself.
Trust is involved when we buy a company’s products of services.
Companies spend millions of dollars a year in advertising trying to
gain our trust. Employees, especially salespeople, are trained in
what to say to build our trust in them and their company.
When I take the bait and find out that the product or service
doesn’t meet my expectations, I feel my trust has been violated.
I’ve been taken advantage of just so the company could make another
dollar. It used to be rare. Now it’s common.
Take AARP for example. Founded as the American Association for
Retired Persons, it quickly became the largest defender of senior’s
rights. It is still one of the most powerful lobbying groups in
Washington. Its members trust it to act in their best interest.
That’s why so many of them were surprised when AARP suddenly changed
course and supported the Medicare Drug Bill. AARP even spent $7
million advertising their support! Members were stunned--only 18% of
them supported it.
What could have caused this trusted voice of seniors to stop acting
on their behalf? I’m not going to judge motives, but isn’t it
interesting that AARP stands to make millions of dollars selling its
new prescription drug insurance called MedicareRX? Hmmm.
AARP receives more money from licensing the AARP name to products
and services then it does from membership dues. They’re becoming
more of a marketing firm then a lobbying firm. Are their products
truly in their member’s best interest? Not always.
AARP mutual funds are a perfect example. Managed by Scudder, not a
single one has performed in the top 20% of its category. Those who
invested because of the AARP name have forgone thousands and
thousands of dollars of growth due to low returns—while AARP has
pocketed tens of millions of dollars.
The key point is that you shouldn’t trust a product just because it
has a familiar name associated with it. Do you homework and compare
it to its competitors.
We can be taken advantage of in other ways. I recently responded to
an offer for a ‘free credit report’. It was provided by one of the
largest credit reporting companies in the world. Surely it could be
trusted.
Nope. Buried in the fine print is that fact that anyone who receives
the ‘free’ credit report is automatically signed up for their credit
monitoring service. Until you call and cancel, your credit card is
billed each month. Since I used my debit card, I didn’t notice the
charge right away. The lesson? Be careful when signing up for ‘free’
offers, read all the fine print, and don’t use your debit card for
online purchases.
Lastly, I recently bought an electronic book online as part of some
research I was doing on Equity-Indexed Annuities. The sales pitch
explained that ‘shocking’ truths about annuities would be revealed.
It’s easy to find people promoting annuities and I was looking for
an opposing view. This seemed to be it.
When I went to purchase it I learned that the information I was
looking for wasn’t included in the ‘shocking truths’ and that I had
to upgrade to learn those secrets. The entire package cost $97,
double what was initially advertised.
Worse, the material ended up being a sales pitch FOR annuities! I
read the terms and conditions. They sell your information to list
brokers and insurance agents. One of the ‘bonus’ services was the
ability to talk with a live person about your situation. In reality,
you would be connected to an insurance salesperson and received
biased advice.
It shouldn’t be this way. We shouldn’t have to constantly keep our
guard up to protect ourselves. But we do. Be careful who you
trust—especially a financial salesperson. The people and companies
that provide the products and services you use should repeatedly
earn your trust. If not, they don’t deserve your business.
Have a financial question? Send me an email and I’ll personally
respond, free of charge. Go to www.guardingyourwealth.com and click
on ‘Ask Jeff’.
In addition to being a nationally syndicated columnist and Certified
Financial Planning Practitioner, Mr. Voudrie provides personal,
private money management services to clients nationwide. |
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