The Steak Dinner Retirement Planning Invitation

About once every two weeks or so, on average, my wife will receive a mailer inviting her to a free steak dinner – apparently vegetarians aren’t good prospects – that promises to reveal the secret of not running out of money in her golden years. I used to receive the same ones when I worked at UK, so I assume that’s the list she’s on. As I scan the invitations I often skim to the bottom of the page where the fine print explains these firms don’t really offer investment, estate or tax advice. What do they sell? Insurance contracts called annuities. They imply they’re offering educational retirement planning workshops, but their real intent is to sell expensive annuities and life insurance policies.

Several years ago, AARP published a report titled, “Protecting Older Investors: 2009 Free Lunch Seminar Report.” Their report found that 63% of the people surveyed had received an invitation like the one I just described and over 5.9 million people 55 and over had actually attended at least one of these steak dinners. The Securities and Exchange Commission – the other SEC – found that a whopping 57% of the time salespeople used materials that “may have been misleading or exaggerated or included seemingly unwarranted claims.” Whoa!

Now, annuities are complicated insurance contracts that are often accompanied by hefty fees and strings attached. More important, if a salesperson wants someone to buy a product, why the heck do they hide the product name in the fine print at the bottom? Makes you wonder, doesn’t it?

One of the things I have learned since joining the financial services industry is that literally anyone can print 500 business cards for $9.99 and call themselves “financial advisors.” And do. So, if you find yourself cutting through a rather tough free steak or are searching for legitimate financial planning and investment management help, here are some good questions to ask:

• Is the advisor a fiduciary? A fiduciary is required by law to provide only advice that is in the best interests of the client. Not a lesser standard called, “suitable.” Who settles for suitable when best interest is available?
• What is their financial planning process? Do they actually determine, with you, how much income you will need in retirement to maintain your desired standard of living? Determine how much you will need to accumulate by retirement and how much you will need to save and earn on your investments to reach that target? Do they help you tax plan? Help with estate planning? Does this process help determine which investments they recommend?
• Do they personally own the same investments they’re recommending for you?
• When and how do you access your investments if you need your money?
• If you decide you don’t want to be a client anymore, can you leave within 30 days?
• Are they a fee-only advisor or do they make money from commissions too? Some advisors charge their clients a fee and then earn additional money from placing their clients in certain investments that pay them a commission to do so. Those advisors aren’t fiduciaries.

Would anyone ever choose a doctor or dentist that wasn’t providing them advice that’s in their best interest? Then why hire a financial professional that isn’t?

If you have questions about financial planning, investment management, or retirement, find a CERTIFIED FINANCIAL PLANNER™ professional and schedule a free consultation. CFP®s are fiduciaries and are required by law to act in their client’s best interest and disclose conflicts of interests, if any. Brokers and insurance agents don’t have to follow those same standards – although they appear to have plenty of steaks.

Steve Byars, CFP®