Don’t Lose the Farm at an Investment Seminar

The following post is by MPFJ staff writer, Marie. You can read more of Marie’s articles over at her own blog, Family Money Values. Enjoy! 

Attending seminars and training sessions to learn about a topic of interest to you is a worthy endeavor, but you have to be careful about taking action based on those seminars.

Some are entirely legitimate and you might find the perfect financial resource to accomplish your goals.  Financial advisors come in all shapes and flavors – some are just broker house representatives, others are highly trained and certified professionals and some are just shady dealers trying to get your money.

Often my spouse and I get invitations to attend investment related seminars – including a free dinner.  We get them more often now that we are over 65.  Typically they are for dinner at a popular local restaurant with pretty good food.  Headliners have included things like:  “Come learn how to make your money last in retirement”.  “How to invest in a down market”.  “Plan your retirement income” and etc.

It’s not surprising that we receive these invitations. Forbes article Beware The Free Lunch (Or Dinner) Investment Seminar reported:

“According to FINRA research, 64 percent of those responding to a survey of people age 40 and over had been invited to an “educational” seminar with a free meal offered.”

The North American Securities Administrators Association says:

“State securities regulators warn senior investors to be aware that a combination of “free lunch” seminars, misleading professional “senior specialist” designations, and abusive sales practices can create a perfect storm for investment fraud. Remember: there’s no such thing as a free lunch.”

The Alberta Securities Commission has a list of various types of scams including these.  They note some red flags – such as:

• “Above average returns with little or no risk. No investment is risk free.
• Offer of loans to cover both the investment and further investment seminars.
• Claims of a secret or exclusive technique for building wealth. The salespeople at seminars can make misleading claims that entice you to sign up right away.
• Limited time offer that discourages investors from getting independent advice.
• Promises to ‘be a millionaire in three years’ and ‘get-rich-quick’.
• Sales pitches of no cost involved or free attendance at seminars. The first session you are invited to attend may be free, but you may have to pay fees and commissions that the promoters did not tell you about beforehand”

A few years ago, we (my spouse and I) actually attended one of these free dinner investment seminars.  The dinner was hosted by a broker (supposedly associated with one of the big wire houses – I don’t remember which).  The event took all evening, from about 5 pm until about 9 pm.  It was at a nice steakhouse in my home town – one that is on the upscale side of the price range.  We did get a nice dinner.  After dinner, there was a presentation and a long sales pitch.  We listened and squirmed, wanting to leave and get home so we could get some rest for the next day.  We bought nothing and we gave no information.  We were not contacted much afterward.  Overall, it wasn’t an unpleasant experience.  We felt we paid for our dinner by listening to the pitch, but didn’t feel obligated to buy because we had a ‘free’ dinner.  We’ve never been back, preferring to rely on our own research and studies to figure out our investments.

Junk mail isn’t the only avenue used by brokers and other’s dealing in securities investments for a living to offer free seminars.

You can find one in most local ‘communiversity’ classes (classes taught by community volunteers, usually held at a local school and charging only a small fee for participants).  Heck, your company may even host one.  Mine did.

My company brought in local financial advisers to teach a course that covered retirement saving and investing.  The company offered it only to people 55 and over.  As part of the course, the advisers offered to do a free financial plan – a value (they claimed) worth hundreds of dollars.  At the seminar the advisers really played up the benefits of variable annuities.  They did such a good job that one of my co-workers fell, hook, line and sinker for the pitch.  She turned over her entire retirement savings to them to invest.  I’m pretty sure she is back at work now!

Even Vanguard offers a ‘financial planning’ service.  They, however, are very up front on their web site with the fact that their recommendations will put you into Vanguard mutual funds only – so if that’s not what you are looking for, don’t ask them to do a financial plan for you, even if it is free!

So, if you read your junk mail, and want that free dinner, be prepared to invest your time to pay for it and don’t feel obligated to buy something just because you got dinner!

• You don’t owe the broker a sale for the dinner.
• You don’t owe the charity a donation for the return address stickers.
• You don’t owe the company a response because they sent you a dollar in the mail – unsolicited.
• Heck, you don’t even have to get the junk mail (but it does help the USPS stay afloat).

How about you all? Have you ever attended a financial seminar? Did you feel pressured to buy any of the products?

Share your experiences by commenting below! 

***Photo courtesy of https://www.flickr.com/photos/ctbto/7995586057/in/