Beware the Free Lunch Financial Seminars

Each month I receive at least one invitation to a free lunch at a local restaurant, courtesy of a local financial planner, insurance broker, or investment advisor. I am told that my attendance will be rewarded by an informative presentation on investing or retirement planning. I have never attended one of these “seminars” for good reason. They invariably are nothing more than thinly disguised sales presentations to a captive audience.

If you don’t believe me, I encourage you to read this article from the Boston Globe.  The reporter accepted and attended every “free lunch” financial seminar to which he was invited over a six month period.  In almost every case, the seminar ended up with a pitch for a so-called low-risk, high return investment or financial product. These were intended to take advantage of fearful boomer and senior citizen investors.

The AARP conducted its own study of “free lunch” seminars offered to the over-55 crowd. Here are some of the findings:

In the survey of more than 1,000 people age 55-plus conducted this summer, 63 percent said they had received an invitation to a free financial seminar in the mail. Among those who received either mail or e-mail invitations, 57 percent said they had been sent five or more invitations. About 9 percent of respondents said they had attended a free financial seminar in the past three years, a rate that translates into nearly 6 million people over 55 nationwide.

As for those who attended seminars, 39 percent said that they were solicited to buy financial products, and 50 percent said they were asked to provide information about their finances. Almost half (46 percent) said the seminar presenter tried to make a follow-up appointment at their home.

The AARP has since launched a volunteer monitoring and reporting program for these seminars. This is what the volunteers have reported:

39 percent were encouraged to buy an annuity.

48 percent said the speaker never disclosed risks associated with annuities, though 43 percent said the investments were pitched as “low-risk.”

67 percent said the speaker never informed them that there are expensive surrender charges and tax penalties when annuities are canceled early.

Among all the volunteers, 54 percent said they were told about investment products that promised returns of 7 percent or more.

You have to know that in today’s markets, a promise of a 7% return is an enormous red flag.

You can learn more  about the AARP Free Lunch Seminar Monitoring Program.

When it comes to careful use of your money, there is no free lunch.

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