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No Free Lunch

A study conducted by the SEC on the “free lunch” seminars reviewed sales practice violations by financial services agents. To protect seniors in Florida, California, Texas, Alabama, the Carolinas, and other states, the regulators examined firms targeting seniors with free lunch seminars. The SEC found the following after the study:

Half of the examinations showed that firms mis-used advertising and sales materials; with the most common types of clearly misleading statements appearing on mailers and advertisements for the seminars, and frequently involved statements about safety, liquidity, or anticipated rates of return.

Individuals who attended the sales seminars often did not understand that the seminar was sponsored by an undisclosed company who had a financial interest in sales of the products. The mailers and advertisements for the seminars often focused on the individuals who would be conducting the seminar, and often displayed the name of the registered representative or investment advisor, a photograph and information about his or her background as an expert in providing investment advice. In these situations, seminar attendees may not have known that the financial adviser speaking at the seminar was not unbiased and making product recommendations.

Other studies found that the registered representatives or investment advisors holding the sales seminars at a recommended investments that did not appear to be suitable for the individual customers. 23% of the examinations conducted included recommendations that were unsuitable and live the customers investment objectives or time horizon, that is a risky investment was recommended to an investor with a conservative investment objective, or an ill liquid investment was recommended to an investor with a short-term need for cash.

The regulators concluded that because seniors are targeted as attendees for sales seminars, ongoing education investor education efforts for seniors should provide education with respect to the free lunch sales seminars. Senior investors should understand that these are sales seminars come that is, that they are intended to result in the sales of financial products, and that they may be sponsored by an undisclosed company with a financial interest in product sales.

The bottom line is that just as you heard on the radio, there is no free lunch!

Client Reviews
Howard Rosenfield is truly a life saver. After months of working with my financial advisor, I found out he was making risky investments without my knowledge. When I discovered how much money I lost, I thought there was nothing I could do. Howard explained all the difficult terms and what exactly my financial advisor did wrong. If it wasn't for Howard, I would never have recovered my losses and would be under extreme financial distress to this day. J.
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