Free Lunch Seminars
Have you ever received an invitation to an investment seminar? A “Free Lunch (or Dinner) Seminar” is a marketing technique financial service companies and other businesses use to solicit new clients. While some free meal seminars are educational, their true purpose is to sell various products. At the seminars, participants are provided with sales information and materials that describe possible investment strategies. Attendees are often required to provide contact and financial information to register. After the seminar, participants receive a solicitation for a “free” consultation aimed at gathering more personal financial information. Free meal seminars advertise through radio, newspaper, and internet ads. Seminars are also offered by invitation, often sent by mail, in hopes of attracting a particular type of customer, such as older adults. Common invitation “catch phrases” include:
“How to make the most of your Social Security”
“How taxes will destroy your current financial plan”
“Ways to reduce risk and options that provide income you won’t outlive”
CONCERNS (as outlined by the Utah Division of Securities)
Targeting Older Adults
Many Free Lunch Seminars target older adults. These seminars are advertised with names like “Seniors Financial Survival Seminar” or “Senior Financial Safety Workshop” and offer free advice by experts who may claim to specialize in retirement living, financial planning, tax strategies, trusts, inheritance issues, and legacy planning.
Unregistered Securities, Unlicensed Agents
Free Lunch Seminars may sell investment opportunities that require securities registration. Sometimes these seminars pitch unregistered securities. Aside from the registration issue, individuals who make an offer or sale of a security need to be licensed as broker-dealer agents or issuer-agents.
Selling Unsuitable Investments
Since Free Lunch Seminars are designed to sell, attendees may be sold investments that are not suitable for their financial situation, needs, or objectives. Ultimately, investors should always evaluate an investment before investing.
Bad Sales Practices
Investors need to be extremely cautious of attending of a Free Lunch Seminar. The registration process often involves disclosing personal financial information. At the seminar, essentially, the salesperson is paying for a captive audience where they can pitch prospective investors. Investors, particularly older adults, should be wary of any Free Lunch Seminar pitch. Realize that fancy venues, a free meal, and a great presentation do not make a sound or prudent investment. Many Free Lunch Seminars resort to bad sales practices, such as: misleading investors, misrepresenting products, omitting material information, and harassing attendees after the event. Be aware that such sales practices often begin with disturbing discussions about the volatility of the market and the product being sold is then presented as the solution. Some seminars use fear to sell highly commissioned products that may not be in the best interest of the attendees.
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SEC - Resources for Older Adults
PREPARE BEFORE ATTENDING
Do your homework before the seminar
A legitimate securities salesperson must be properly licensed, and his or her firm must be registered with FINRA, the Securities and Exchange Commission, or a state securities regulator—depending on the type of business the firm conducts. Additionally, an insurance agent must be licensed by the state insurance commissioner where he or she does business. You can check a brokers registration at www.finra.org/brokercheck and an investment adviser on the SEC’s website at www.adviserinfo.sec.gov
Ask questions at the seminar
Don’t be satisfied with learning only what the speaker presentation is designed to communicate. Ask as many as questions as you need to understand the investment’s objectives, risks, fees/costs, etc. You should understand the product before you decide to make an investment purchase. If the speaker can’t or won’t answer your questions, then the investment is not right for you.
Before the seminar, commit to yourself to do more homework after the seminar
Don’t be lured to make your purchase decision on the spot. Whether the presentation uses a "soft sell" or “hard sell” approach, take the time you need to analyze the advantages and disadvantages of the investment. Sponsors can create a sense of urgency and play on feelings of obligation to rush you on a decision.
Decide Now to Decide Later
Savvy investors refuse to be rushed. A good investment will be available tomorrow or next week—or next month. Remember, it’s always OK to say no to an investment—whether you received a free meal or not.
The information above is shared from websites of The Utah Department of Commerce and The Financial Industry Regulatory Authority (FINRA-- a not-for-profit organization that regulates broker-dealers and registered brokers in the United States. FINRA's mission is to protect investors and ensure the integrity of the securities markets).
https://www.finra.org/sites/default/files/2022-07/FINRA-Free-Lunch-Investment-Scams.pdf
https://securities.utah.gov/communication-and-outreach/basic-definitions/free-lunch-seminars/
These are the opinions of Retirement Strategy Group and not necessarily those of Cambridge Investment Research, are for informational purposes only, and should not be construed or acted upon as individualized investment advice. Investing involves risk. Depending on the types of investments, there may be varying degrees of risk. Investors should be prepared to bear loss, including total loss of principal."