WHEN A ‘RETIREMENT SPECIALIST’ OFFERS A FREE DINNER – RUN!

RunAt least once a week, I get a fancy looking invitation for a free dinner.  The sponsor usually paints himself as a ‘retirement specialist.”  He may say he is endorsed by a religious organization.  The invitation may include a free seminar on retirement planning.

If you are a recipient of one of these invitations, you are probably retired or approaching retirement.  Before taking the bait, however, please consider the following:

  • First, there is no such thing as a free dinner.  You are being targeted as part of a sophisticated marketing scheme.  The sponsor has targeted you for a reason and that reason has nothing to do with world hunger or doing a good deed.
  • Second, remember that Jesse James robbed banks because that is where the money is.  Financial planners target retirees because that’s who has investable money.  In addition, most retirees converting a 401k plan to an IRA have little or no experience managing assets.
  • Third, be under no illusion that the purpose of the dinner is to peddle some type of investment product to you.  Be assured that the sales pressure will continue until you buy something.  The sponsors of these dinners know that most people view dinner as a social event.  People tend to let their guard down.  They may also feel a sense of obligation in accepting something for free.  The sponsors of these dinners are playing a psychological game where the rules have been stacked in their favor.
  • Fourth, the product most often sold at these dinners is something called a variable annuity.  A variable annuity is a costly and complex insurance product that is one of the most abused products in the financial services industry.

For now it’s enough to know that the Missiouri Secretary of State lists variable annuities as Number 6 on its “Top Ten Threats fo Missouri Investors.”

And guess what’s Number 3?  If you guessed free dinner seminars go to the head of the class.

The next time you get one of those so called ‘free’ invitations, go out to dinner, but pay for it yourself.