CNN Money Warns Seniors About ‘Free Lunch Seminars’

There’s no such thing as a free lunch. CNN Money recently reported on the insurgence of “free lunch seminars” targeted toward seniors. What’s touted as an opportunity to educate senior citizens on their options for annuities and financial planning may actually be a means to conduct annuity fraud, according to experts.

An anonymous senior, “AK” from Los Angeles, wrote to CNN asking about his current financial situation—and whether or not these senior seminars are legitimate.

“A presenter at the senior center I attend is suggesting that I move this money (pension) to an index annuity,” he says. “Would this be a wise move?”

Of course, the money experts at CNN are unlikely to have an ulterior motive, which may not be the case for those who put on the free lunch seminars for seniors.

“I don’t think you should invest in any financial product on the basis of a presentation given by an adviser at your senior citizens center or any other venue; and that goes double for index annuities,” advises CNN. But AK is just one of many seniors who might be lured by a presentation. Just what are these “free lunches” and how much are they really costing seniors?

CNN Money expert Blake Lewis notes that any educational presentation, including free seminars, are meant to target seniors and are usually “thinly disguised sales spiels” that might have high hidden fees or even be completely bogus.

If it sounds too good to be true, it probably is—but that’s not the only red flag to watch out for.

What’s in it for these financial advisers that they’re taking their time, perhaps money (for travel and providing lunch) and effort to pitch to seniors? They’re certainly not doing it out of the goodness of their heart. Whether it’s a lunch seminar, cold call or email, tread carefully when it comes to this approach because it might be a big financial risk. If it turns out to be an annuity scam, legal options are available to try and get your money back.

Senior Annuity Fraud: The Numbers

The Certified Financial Planner Board of Standards recently conducted a survey of more than 2,600 financial planners that revealed the average senior who’s the victim of annuity fraud loses about $140,500. It’s important to note than any type of product might be pitched during these seminars including index annuities, life insurance policies, investment “opportunities” and a variety of other products. However, index annuities are among the most popular.

The reason? Index annuities often come with a tiny “guaranteed” return but it comes with a bait and switch—seniors are promised that if they hold out, and the market does well, they can make bigger gains. Basically, it seems as if these products have the best of both worlds: A guarantee as well as the allure of a big “win” (conditions permitting, of course).

Things get even more tempting since the current return on truly safe options such as CDs and savings accounts are so low that they’re almost useless. However, CNN Money warns that index annuities also come with their own set of drawbacks. They’re complicated (which is great for the adviser and a nightmare for the client), can have great bonuses that might not come to fruition, but also come with very high expenses and surrender charges.

Two years ago, the Financial Industry Regulatory Authority (FINRA) issues a big Investor Alert that warned potential investors about the risks of index annuities. However, this isn’t to say that all index annuities should be shunned. Clients should, however, have a trusted and reputable financial adviser in their corner—and the odds of finding one who’s giving away free lunches at a seminar are very weak.

Those Who Take the Bait

Unfortunately, there’s a lot of subjectivity when it comes to what constitutes a “real” financial pro. Investors should do their homework and not get drawn in by a salesman’s glitz. Most financial advisers charge on an hourly basis, or another option is choosing a certified financial planner who specializes in working with retirees. In general, it’s wise to steer clear of those who give free presentations.

There are a number of annuity fraud victims who have recently filed annuity lawsuits after allegedly being tricked by slick salespeople. Joining an annuity class action lawsuit is a good move for many who want a fast resolution to get the compensation they deserve.

Did You Fall for an Annuity Scam Pitch?

If you or a loved one feel you were tricked into a financial situation, you might quality for an annuity legal claim. Read more about what you can do by visiting the Life Insurance, Annuities Fraud Class Action Lawsuit Investigation today. Submit your story, and an attorney will be in touch with you if you qualify for a free annuities claim review.