There Is No Such Thing As A Free Lunch

1/09/2008

posted by N. Sioris

Stumble It!

We have all heard the expression; "There is no such thing as a free lunch." Most everyone interprets that phrase to mean that if something is being offered free, it usually has strings attached.

Today, more and more people, seniors in particular, are being offered a "free lunch" or sometimes even a "free dinner," in exchange for attending a seminar. Usually the seminar presenters are hawking financial services, investment products, reverse mortgages, annuities, life insurance, long term care insurance, etc. etc.

In the January 2008 issue of Kiplinger magazine, author Kimberly Lankford, discusses retirement schemes. Lankford says that the Securities and Exchange Commission discovered that unethical business practices occurred in almost half of the seminars that were checked by the SEC.

Kiplinger outlines four strategies to protect your assets from retirement rip-offs.

1. Be wary of promises of unrealistic returns. "Anything that talks about average returns higher than 11 percent should be treated with suspicion." says Lankford. "If the broker goes from saying 'averages' to 'guarantees,' be ready to walk away."

2. Check the professional background of the broker by going to the website for Financial Industry Regulatory Authority's Broker Check. Here you can find information on about 660,000 registered brokers and 5,100 securities firms. If the advisor is a financial plannner, you can check credentials with the CFP Board of Standards. You can also refer to the Senior Investor Resource Center and the SEC's senior investor page. Something as simple as verify whether an agent is licensed or not can keep you from being a victim of a scam.

3. Keep records of all meetings. Take notes when speaking with a broker about your investment goals, or ask for a written summation of your discussion. Requesting paperwork can discourage an agent in search of an easy target.

4. Set up an account. When paying for your investments, never write checks directly to an individual. Open an account with an independent financial institution. That way you will also have leverage if your investment starts to lose value, or if you discover your broker has rated the risk it carries below its real potential.