A great meal and helpful information from an expert . . . who wouldn’t want that? With ten thousand baby-boomers retiring every day for the next twenty years, the financial services industry is shifting into overdrive. If you are approaching retirement, or are already there, you can expect more “free lunch” seminar invitations in your mailbox. Don’t get me wrong, I like seminars and for ten years I’ve used them to market my own firm’s services. I’ve also taught other advisers how to conduct professional seminars.

 

Good Thing: A seminar can be a good thing for both financial advisers and investors. The adviser gets an audience and the attendees get to evaluate him and his services in (what should be) a “low pressure” setting. Unfortunately, there’s also trouble with seminars. Some salespeople will exaggerate their expertise or misrepresent the topics they’ll cover. Some resort to scare tactics to boost attendance. For example, “buy this product to save yourself and those you love from the world’s end!” (Okay, now I’m exaggerating, but you get the point.) While I respect my fellow financial professionals’ efforts to market their services, creating unnecessary stress or unrealistic expectations of success with slight-of-hand invitations is both reckless and wrong. There are also too many stories of investors getting scammed out of their life savings at these events. So, where are the regulators, you might ask? They are busy and can’t attend every seminar. Here are some tips that will help if you attend a seminar:

 

Low Hurdle: It is easier than most people realize to get into the financial services industry. It only takes a few months of preparation to get insurance and securities licenses. Then, with a little help from a company interested in an agent’s success (like a broker-dealer, insurance company or a marketing firm), a “newbie adviser” is provided a “canned” seminar presentation and a script to follow. Voila! Now, he’s a financial expert ready to advise you on how to invest your life’s savings!

 

Know Before You Go: Read the seminar invitation carefully. Who will be the speaker at the event? Will it be the adviser or a speaker from out of town? Is the adviser affiliated with a financial firm? Which one? Do you see any credentials or other indications of expertise and experience? Is there a website you can visit? Do the seminar topics sound “too good to be true?” Do any alarm you? Will this be a sales presentation or an educational talk? Listen to your gut.

 

Misleading Mantras: Over the years, I’ve seen some rather misleading seminar invitations. If your invitation includes statements like these three examples, you should think twice about attending:

 

1. “The IRS will take 70% of your IRA when you die!” Really? Such a tax rate is extraordinarily unlikely. A 70% tax rate would require the IRA to be subject to BOTH federal income taxes and estate taxes at the owner’s death. In 2013, a single IRA owner’s estate would have to be more than $5,250,000 ($10,500,000 for a surviving spouse) in order for estate taxes to apply. Not only that, the IRA owner would also need to have overlooked naming a beneficiary for his IRA to subject it to income taxes at his death.

 

2. “Learn how you can earn 6% guaranteed . . .” Any statements about earning a guaranteed 6% return are false; in today’s economy, no product or investment offers a rate this high without risk. Period.

 

3. “Get stock market returns without risk!” Impossible. No such product exists on the planet. No investment gives you all of the upside of the stock market while protecting you from the potential downside losses.

 

Ignore Testimonials: If the seminar presenter asks a “current customer” to stand up and talk about how great he or his product is, how do you know it is not an act? Some financial scams have relied on these third-party collaborators.

 

Leave If You Want: If you are asked to provide information or complete a form, you can refuse. If you feel uncomfortable, you can leave at any time. You are under no obligation. Be very careful about giving any financial information to someone you just met. Please do not invite a “stranger” to your home; go to his office instead. If he doesn’t have an office, reconsider your choice or meet in a public place. It is a lot easier to walk out of an adviser’s office or a restaurant, than to ask him to leave your house.

 

Do Your Own Research: If the adviser discusses a specific product during the seminar, write down the company and the name of the product so you can do your own research before agreeing to meet with him. Do an internet search and see what comes up when you key in the adviser’s name, firm and the product being recommended. Call your state’s department of insurance or securities regulator and ask if the adviser has any complaints against him or his company.

 

Being an informed consumer will help you choose better financial products and services. Now, sit back, relax and enjoy the show!

 

 

David D. Holland, a CERTIFIED FINANCIAL PLANNER™ practitioner, hosts a weekday radio show at 9AM on AM1380 Ormond Beach, AM1230 New Smyrna Beach and AM1490 Deland. He has also authored two books in his Confessions of a Financial Planner series. Holland offers investment advice through Holland Advisory Services, Inc., a registered investment adviser in Ormond Beach. He can be contacted at (386) 671-7526. Email your financial questions to info@DavidHolland.com.