September 2007
‘Free’ investment seminars can cost you dearly
What's another name for a free "investment seminar"? Try "sales pitch."
Or worse.
As a report released on September 10 by the U.S. Securities and Exchange Commission noted in grim detail, the educational "workshops" and "financial seminars" offered by brokerage firms and other financial outfits are--surprise, surprise--simply attempts to sign up clients.
What's more, the SEC said, a sizable percentage of those events involve the sale of financial products that are unsuitable for the customer, or are downright fraudulent.
The study involved 110 securities firms and their branch offices.
Half of the seminars, the SEC said, featured exaggerated or misleading advertising claims, such as "immediately add $100,000 to your net worth" and "how to receive a 13.3 percent return." Twenty-three percent involved potentially unsuitable recommendations, and 13 percent, possible fraud.
The Consumer Reports Money Adviser newsletter offers these tips for protecting yourself:
Or worse.
As a report released on September 10 by the U.S. Securities and Exchange Commission noted in grim detail, the educational "workshops" and "financial seminars" offered by brokerage firms and other financial outfits are--surprise, surprise--simply attempts to sign up clients.
What's more, the SEC said, a sizable percentage of those events involve the sale of financial products that are unsuitable for the customer, or are downright fraudulent.
The study involved 110 securities firms and their branch offices.
Half of the seminars, the SEC said, featured exaggerated or misleading advertising claims, such as "immediately add $100,000 to your net worth" and "how to receive a 13.3 percent return." Twenty-three percent involved potentially unsuitable recommendations, and 13 percent, possible fraud.
The Consumer Reports Money Adviser newsletter offers these tips for protecting yourself:
- If you do attend an investment seminar, never sign up or buy anything on the spot. And don't be surprised if you get some
high-pressure follow-up calls from your hosts.
- If you need financial advice, consider consulting a Certified Financial Planner (CFP), preferably one who works on a fee-only
basis and doesn't receive commissions from the investments or other products he or she recommends. To find a fee-only CFP,
go to www.napfa.org or www.cfp.net.
- Once you've located an adviser you like, get his or her company's Form ADV. Any Certified Financial Planner--and for that
matter, anyone--whose job is giving advice on the value, sale, or purchase of securities must file this form with the SEC
or state regulator. Part 1 of the ADV discloses any formal investment-related public disciplinary proceedings and legal judgments
against an adviser, going back 10 years. You might be able to find your adviser's Part 1 at www.adviserinfo.sec.gov. Part II of the ADV, which you have to request from the adviser, outlines his or her services, compensation, and potential
conflicts of interest.
- Also consult the Central Registration Depository, a database that shows an adviser's disciplinary record and work history. You can request this information through your state regulator or from www.finra.org/brokercheck.
