About twice a month I receive an invitation to a steak dinner at a local restaurant from two different investment firms. These firms are offering retirement planning seminars to make sure I don’t run out of money during my golden years.

As I scan their elaborate mailers, I drop my eyes to the bottom of the invitation to read the small print. These firms don’t offer investment, estate, or tax advice. What do they offer? Insurance. They come in under the guise of offering educational retirement planning workshops, but their real intent is to sell annuities and expensive life insurance policies.

These firms spend several thousand dollars to get a few people to attend their steak dinners. To get an audience of 50 people, they’ll send 10,000 mailers. The mailing will cost about $5,000 and the dinner will add another $8,000. If they host their event at a hotel, it may add another $1,000 to the cost. So, all in, it may cost $14,000 or more to host an event.

Why would these firms spend $14,000 per month to offer free retirement workshops? Because if they sell a few insurance policies, they’ll recoup their cost and make a substantial profit.  For example, if their guests purchase $1 million in annuities, the sales representatives will generate commissions of $50,000 or more!

Here are several questions to ask the speakers, and yourself, if you attend one of these gatherings.

• Are they fiduciaries?
• What is their financial planning process?
• Do they own the investments they’re recommending?
• If you do purchase the investment, what is the initial cost?
• What is the fee to redeem your investment if you need access to your money?
• Are there alternative, less expensive investments to the ones they are recommending?
• Do you have to annuitize your investment to receive the highest possible interest rate?
• Do they work with multiple insurance providers?

If you have questions about retirement or Social Security, meet with a Certified Financial Planner (CFP)® who charges a flat fee or hourly rate. CFPs are fiduciaries and are required by law to act in your best interest and disclose any conflicts of interests – not so with brokers or insurance agents. In addition, most CFPs offer a free consultation before starting the planning process and you are under no obligation to act on their recommendations.

The fall is seminar season so be on guard for elaborate mailers offering “free” dinners. If you live in a high-income zip code and you’re over the age of 50, you are a prime target for these mass mailings.

Caveat Emptor.

Beware of false prophets, who come to you in sheep’s clothing but inwardly are ravenous wolves. ~ Matthew 7:15

9/6/2018

Bill Parrott is the President and CEO of Parrott Wealth Management firm located in Austin, Texas. Parrott Wealth Management is a fee-only, fiduciary, registered investment advisor firm. Our goal is to remove complexity, confusion, and worry from the investment and financial planning process.

 

Note: Investments are not guaranteed and do involve risk. Your returns may differ than those posted in this blog.