INVESTING - Lunch seminars may not serve seniors well - A study finds sales pitches, not unbiased advice, are typical.
WASHINGTON — Accepting an invitation to a "free lunch" investment seminar could come at a high price -- especially if you are retired, according to findings released Monday by state and federal regulators.
Instead of offering unbiased investment advice, restaurant seminars are typically geared to selling high-cost financial products -- with promoters often throwing in door prizes, tote bags and even golf games as ploys to get senior citizens to buy into their investments, the study found.
Regulators scrutinized 110 free-lunch seminars and found that half of them featured exaggerated or misleading claims. What's more, 13% were referred to investigators for possible enforcement action against their promoters.
Virtually all of the seminars were "sales jobs in disguise," despite claiming to be just informational, and more than one-third gave out inappropriate advice to the attendees or committed outright fraud, said Christopher Cox, chairman of the Securities and Exchange Commission.
"The SEC and our fellow regulators intend to put a stop to this," Cox said.
The findings were based on an examination of retirement investment seminars in California, Florida, Texas, Arizona, North Carolina, Alabama and South Carolina from April 2006 to June. They were announced Monday at a Senior Summit hosted by the SEC and other officials in Washington.
Regulators said the burgeoning population of older Americans has attracted legions of salespeople pushing questionable investments. The free-lunch seminars are one example of unscrupulous sales tactics; others include hyped-up "senior advisor" designations meant to give salespeople unwarranted credibility and efforts to lure older workers into early retirement so that financial advisors can earn commissions managing their retirement nest eggs.
The findings echo those made last year in The Times' "Retirement at Risk" series, which detailed how some financial advisors used hard-sell tactics to push costly investments on senior citizens without regard to their financial needs.
Mary Schapiro, chief executive of the Financial Industry Regulatory Authority, the investment watchdog agency created this year, said there was "a true need for increased educational and enforcement efforts."
"I'm concerned that as the population grows older, these strong-arm tactics will only grow more sophisticated," she said.
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