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Guarding Your Wealth for Senior Citizens
No Such Thing as a Free Lunch and Senior Citizens
Should Know Better
With baby boomers swelling the ranks of retirees,
regulators expect a rise in financial scammers
 By Jeffrey D. Voudrie, CFP
Sept. 21, 2007 - 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?
If you have a specific question or would like more
information, give me a call toll-free at 1-877-827-1463 or you can also reach me by email at
jeff@guardingyourwealth.com.
I will answer your financial question FREE.
About Guarding Your Wealth:
“Guarding Your Wealth” is a
nationally syndicated weekly personal finance column written by Jeffrey
D. Voudrie, CFP. Mr. Voudrie is the President of Legacy Planning Group,
a private wealth management firm that employs sophisticated proprietary
strategies designed to protect and grow its clients' investments. Visit his website,
www.guardingyourwealth.com to read past articles under the Guarding
Your Wealth Article Archive that may not have appeared in
SeniorJournal.com.
Guarding Your Wealth for Seniors, on
SeniorJournal.com, is
a collection of columns by Voudrie that deal with issues of particular
interest to senior citizens.
Click here
for all columns.
In addition to being a nationally
syndicated columnist and Certified Financial Planning Practitioner, Mr.
Voudrie provides personal, private money management services to select
private clients
nationwide.
Looking for an energetic expert who
is passionate about financial and wealth management? Mr. Voudrie is an
excellent speaker who will excite and inspire your audience. Mr. Voudrie
is available for a limited number of speaking engagements, television
appearances and radio talk shows. For bookings, email
jeff@guardingyourwealth.com.
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