Free Lunch


You’ve seen the advertisements and flyers that come in the papers inviting you to attend a “Free Informational Seminar.”  Or maybe you even receive a formal looking invitation with “complimentary tickets” to a dinner where you will learn “Tax Saving Secrets that your attorney, CPA, or financial advisor didn’t tell you.”  So, what could be better than a free meal where you receive free financial advice?  ‘A lot,’ according to the Utah State Department of Commerce.

In the spirit of late night televisions Top Ten lists, the Utah Division of Securities has identified what they feel are the Top Ten investment scams to look out for in 2007.  Coming in at #3 is “Free Meal” Seminars for Seniors.  The media alert released at the end of last year warns consumers, especially seniors, about these seminars.

The press release states:  “Many seniors receive invitations to a seminar at which investment advice will be offered along with a promise of a free meal.  At the seminar, seniors are told they can increase their investment income, avoid taxes, and earn safe and guaranteed returns.  At the conclusion of the seminar, each senior is asked to make an appointment for a personal visit at which the senior’s investment goals can be analyzed.  Frequently, these individual meetings are used to learn about all of the senior’s assets and to recommend that they sell their current investments and purchase variable annuities or equity-indexed annuities.  These annuities can be appropriate for some investors, but they can be complex and carry extremely high fees and long holding periods.  Many of those targeting seniors with free-meal pitches claim to be certified experts, when often the certifications mean nothing more than the person has been trained on what sales pitches are most effective with seniors.  During fiscal year 2004-2005 state securities regulators across the country found that over 25% of all enforcement actions involved the financial exploitation of seniors and more than 30% involved the sale of variable or equity-indexed annuities.”

Several states have begun prosecuting sponsors of such seminars.  A recent article in Investment News cited a case in Massachusetts where an insurance salesman was charged with taking advantage of “sophisticated marketing tools geared towards senior citizens to hold himself out as an objective, knowledgeable and unbiased adviser to seniors, with the undisclosed agenda of convincing them to sell their assets in order to buy unsuitable, high-commission annuities.” 

One tactic of these seminar sponsors seems to be to convince people that they or their advisers are overlooking huge opportunities to save money in taxes.  Taxes are often a seminar topic because most people cringe at the thought of giving any more to the government than they absolutely have to.  One seminar training manual reportedly instructs the sponsor to “probe and disturb” attendees by asking them questions that eventually lead them to reveal their financial fears.  “Probe, then disturb, then enhance the problem!”  The manual reportedly goes on to say, “Remember, they’ll change when you hit their fear, anger and greed buttons.”

So when you have financial questions or need financial advice, stick with those you know and trust.  Your accountant, attorney, and financial advisor will be happy to answer any related questions that you may have.  When it comes to ‘free meal seminars,’ the old saying “There is no such thing as a free lunch” appears to be fairly accurate.

Kimber Heaton - Certified Financial Planner