One More Time: No Such Thing as a Free Lunch!

One More Time:  No Such Thing as a Free Lunch!

    Anyone over age 55 is a favored target of vendors selling everything from vacation homes on North Carolina golf courses to “really hot” investment “vehicles.”  A favorite method is to invite you to participate in a “seminar” and lunch at a decent restaurant (or it might be dinner, trips to favored places, golf, or other prizes), all at no charge to induce further participation.  It just might turn out to be the most expensive meal you have ever eaten.

   The “products” offered include equity indexed annuities, participation in private real estate ventures, variable annuities, reverse mortgages, and private securities investments.  The promoters often make representations such as “you’ll never run out of money,” “you can expect annual returns on your investment as high as 25% to 35%”, or “these are securities investments with virtually no risk or loss.”  Reputable financial advisors will be unanimous in their refutation of such claims; such “guarantees” are exaggerated, reckless, and irresponsible.

   Writing in The Legal Intelligencer, William Z. Supplee, IV presented results of a recent survey of these seminars by the North American Administrators’ Association.  The results ought to cause all who receive such invitations to think twice and investigate thoroughly before attending.  What they discovered was that 57% of the sponsors used advertising and sales materials that were exaggerated and/or misleading.  In several instances the expertise and credentials of the seminar presenters were designed to mislead the attendees into thinking the presenters had qualifications which were nonexistent.  Not shockingly, oneinseven of the seminars were found to employ fraudulent practices of a criminal nature.

   What is true today, and it has always been so in the world of investment, with the possible exception of government guaranteed bonds all investments bear a degree of risk.  Generally, rate of return and degree of risk go hand-in-hand, and anyone who tries to assure you that your return will be 25% per annum on your investment without a high degree of risk is lying.  Certainly there are investments that produce results in that range, and higher, but they are usually the type that the elderly with modest resources should avoid because of the risk factor.

   What can you do?  First and foremost, take great care in selecting anyone who is going to involve himself or herself in management of your financial health, just as you do in choosing a family doctor to care for your physical health.  Always be skeptical of anyone who thrusts himself or herself into your existence with enticing claims.  There is an organization, Financial Industry Regulatory Authority, (on the web at which will assist you to check the validity of any salesperson’s credentials.

  With the explosion of mutual funds over the past 20 years, there are hundreds of funds offering every degree of return and risk by recognized companies such as Vanguard and Fidelity.  Put your leisure time to good use by looking at all of the options, and in the end rely on the advice of those who are well-known to you and do not promise pie-in-the-sky (to go with that free lunch!).

  – Ken Butera


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