The savings game

Some ‘free lunch’ seminars prey on older investors’ fears of financial risk

By Humberto Cruz
December 12, 2009

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For six months, I attended every “investment seminar’’ offering a free lunch that I found advertised in the newspaper or in postcards I got in the mail.

I soon realized I would learn little about investing but a lot about high-pressure sales tactics for high-commission products. Although I had no intention of buying anything, I continued attending to gather material for my columns.

After a while, the seminars became so predictably unpleasant that I stopped going this year. Now, based on a study by AARP and the North American Securities Administrators Association, I see that little has changed.

“Many people go to these seminars hoping to learn about ways to create a more secure retirement, but instead are pitched financial products that are fraudulent or unsuitable for them,’’ said Jean Setzfand, director of financial security at AARP.

I must emphasize that some investment seminars are indeed educational. I’ve attended many, including several sponsored by investment firms and featuring talks by economists and money managers. My main concern - and that of regulators - is with solicitations for “free lunch’’ seminars that prey on seniors’ fears by implying they risk financial catastrophe if they don’t do what the presenter says.

An estimated 5.9 million Americans 55 and older have attended a seminar offering a free lunch or dinner in the past three years, with mail as the most common method of solicitation.

In response to such solicitations, AARP and the securities regulators launched a “Free Lunch Monitor’’ program. Armed with checklists, 180 volunteer monitors attended these seminars and reported what they saw. (To learn more about the program or to volunteer, see

The volunteers’ findings, together with the responses to a telephone survey of 1,012 Americans 55 and older, are summarized in a new study titled “Protecting Older Investors: 2009 Free Lunch Seminar Report.’’

For example, 78 percent of people who attended seminars expected they would focus on opportunities to learn more about financial issues. However, once at the seminar, half said they were asked for personal information; 46 percent said the presenter tried to make a follow-up appointment at their home; and 39 percent said the presenter tried to sell them something during or after the seminar.

Many of the seminars focused on annuities. Two-thirds of the volunteer monitors said the presenter did not discuss surrender charges or tax penalties if annuities are cashed in early, and 48 percent said the presenter did not discuss any annuity risks.

“Low risk, high reward is a red flag warning for possible investment fraud,’’ said Denise Voigt Crawford, president of the securities group. “I encourage all seniors to investigate before they invest in any offer served at a free lunch seminar.’’

Humberto Cruz can be reached at