"Because seniors are a growing segment of investors, financial services firms are increasingly focusing their marketing and sales of investment products towards senior investors..."

Background
From the "Greatest Generation" to the "Baby Boomers," seniors have worked hard to build both our nation's economic prosperity and a lifetime's worth of savings. In the United States alone, an American turns 50 once every seven seconds and on January 1, 2006, the first of an estimated 77 million baby boomers, those Americans born from 1946 to 1964, celebrated their 60th birthday. The 50-plus population is the fastest growing segment worldwide and predicted life expectancies are at a historical high. Today’s retirees have more than $8.5 trillion in investible assets and over the next 40 years, they stand to inherit at least $7 trillion from their parents, according to industry estimates.

Because seniors are a growing segment of investors, financial services firms are increasingly focusing their marketing and sales of investment products towards senior investors as well as investors nearing retirement age. So too, are criminals.

State and federal securities regulators are increasingly concerned about the possibility of unscrupulous and abusive sales practices and investment fraud targeted towards senior investors. While people age 60 and older make up 15 percent of the U.S. population, they also account for about 30 percent of fraud victims, estimates Consumer Action, a consumer-advocacy group.

Free Meal Sales Seminars

Many individuals over the age of 50 have received an invitation in the mail offering a free lunch or dinner investment seminar. There’s a certain consistency to the invitations enticements: a free gourmet meal, tips on how to earn excellent returns on your investments, eliminate market risk, grow your retirement funds, and, spouses are urged to attend. These words should be red flags for investors. 

Free meal sales seminars are often advertised in local newspapers, through mass-mailed invitations, mass-email, and on websites.  Sponsors of these seminars offer attractive inducements to attend. The seminars are commonly held at upscale hotels, restaurants, retirement communities, and golf courses. In addition to providing a free meal, the firms and individuals that conduct these seminars often use other incentives such as door prizes, free books, and vacation deals to encourage attendance.

Many free meal seminars are designed to solicit seniors. In addition to a free meal, the bait for many of these seminars is that "income" will be "guaranteed" and substantially higher than the returns someone on a fixed income can expect to get from certificates of deposit, money market investments or other traditional financial products. 

Advertised with names like “Seniors Financial Survival Seminar” or “Senior Financial Safety Workshop,” these seminars offer “free” advice by “experts” on how to attain a secure retirement, or offer financial planning or inheritance advice. The advertisements often imply that there is an urgency to attend.  For example, invitations include phrases such as “limited seating available” or “call now to reserve a seat.”

And while the ads may stress that the seminars are “educational,” and “nothing will be sold at this workshop,” many of these seminars are intended to result in the attendees’ opening new accounts with the sponsoring firm, and ultimately, in the sales of investment products, if not at the seminar itself, then in follow-up contacts with the attendees. Seniors seeking educational insights and information should be aware that the primary goal of the sponsors of these free meal seminars is to obtain new customers and sell investment products.

These examples of invitations to free meal seminars show the common enticements promoters use to building their audience:  a free gourmet meal, tips on how to earn excellent returns on your investments, eliminate market risk, grow your retirement funds, and, spouses are urged to attend. These words should be red flags for investors. 

Promoters of free meal seminars often use the promise of high commissions to lure brokers, insurance agents, investment advisers, accountants, and lawyers, some of them not licensed to sell securities, into offering investments they may know little about, such as variable or equity-indexed annuities, limited partnerships or promissory notes. Some of these individuals hold nothing more than a “designation” as “senior specialists” implying that they have expertise in helping seniors structure their retirement portfolios in such a manner as to reduce taxes, minimize risk and avoid state probate laws.

State securities regulators are seeing a variety of violations associated with many of these seminars, ranging from outright lies and the conversion of investor funds to more sophisticated forms of abuse. Often, in a follow-up sales pitch, the salesman recommends liquidating securities positions and using the proceeds to purchase indexed or variable annuity products that the specialist offers. These products are often grossly unsuitable for senior citizens. Securities professionals must know their customers’ financial situation and refrain from recommending investments that they have reason to believe are unsuitable. It pays to remember to make sure your investments match up with your age, your need for access to your money and your tolerance for risk. These recommendations also may constitute the dissemination of investment advice for compensation. If the salesman is not properly licensed, then he or she is offering investment advice as an unregistered investment adviser, which is a violation of state securities law,

Read the entire article, including how to protect yourself to avoid becoming an investment fraud victim at http://www.nasaa.org/Investor_Education/Investor_Alerts___Tips/7181.cfm