Beware of Seminar Scams
B.
Douglas Hayes
One method that investment advisors, brokers, attorneys,
and accountants have used to attract new clients or service current
clients is seminars. You may have been invited to such seminars yourself.
Common seminar topics include living trusts, investment planning, long-term
care planning, estate planning, and a host of other matters. The common
denominator is that the seminar provider is hoping to obtain or keep
your business. A seminar can be a legitimate way for an attorney, an
accountant, or an investment advisor to introduce you to himself and
his expertise, or to provide a service to current clients.
However, you should be cautious when attending seminars
put on by individuals you do not know and hesitant to take action on
what you learn at the seminar without first consulting with advisors
that you already trust.
For example, salespeople who have no legal qualifications
have targeted seniors and others to purchase revocable living trusts
from them. A revocable living trust is a will substitute that helps
to avoid part of the probate procedures upon your death. It is a legitimate
estate planning tool. However, seminar presenters trying to sell you
a revocable living trust and salespeople who target your homes through
direct mail may be trying to charge you an exorbitant price for the
trust. I have often found that these people will charge 50-200% more
than many local attorneys for the preparation of these documents.
Also, the salespeople often try to sell you a "one-size-fits-all"
trust. The client would usually be better served by going to a local
attorney who regularly works in the estate planning area who can tailor
make your estate planning documents and provide you a better product,
usually for a price less than the salespeople and seminar presenters
charge.
The salesmen of these revocable living trusts often do
a poor job of funding the trust also. Properly transferring your assets
to the trust is important. If you do not properly fund your trust, you
may end up with no benefit at all from having set up a living trust
rather than a will, and the money spent will largely have been wasted.
A local attorney who will be around to help you get your assets transferred
into the trust, and who can review your estate planning with you every
few years, can help make sure that your estate planning is truly effective.
Investment advisors are hitting the seminar and direct
mail trail as well. Be cautious if the seminar provider or salesperson
is trying to get you to change all of your investments. A good portfolio
will be balanced, and an advisor who recommends that you put the bulk
of your liquid assets in one investment or type of investment may not
be acting in your best interests.
I have received reports recently of salespeople in the
area getting individuals to put the bulk of their assets into annuities.
Annuities may be a part of a balanced portfolio, but in most cases should
not be all of your investment. Annuities will often have penalties if
you try to make certain withdrawals before you have held the annuity
for a period of years.
If you have an investment advisor or broker that you
have worked with over a period of time, get their advice on the proposed
investment before transferring your assets. It never hurts to get more
than one point of view before making major decisions such as these.
The individual holding the seminar or the salesperson may be offering
a good product, but it may or may not be right for you. Remember that
the salesman is trying to make a sale.
If you do not have a broker or an investment advisor,
establish a relationship with one who can help advise you to meet your
financial goals. Attorneys and accountants can recommend good financial
advisors to you if you do not know one that you trust already.
Another red flag in a seminar advertisement is a statement
that you should not bring your attorney, accountant, or investment advisor
with you, or that such people are not invited to attend. Such a statement
immediately raises the issue of why the people holding the seminar would
not want individuals there who might be trained in the pros and cons
of various investments. If you go to a seminar that discourages such
advisors from attending, be sure to meet with your attorneys, accountants,
or investment advisors after the seminar but before you put any of your
money with the seminar provider.
Seminars can help you to be a more
informed consumer and can help you get to know local professionals who
can help you with your legal, tax, and investment decision needs. Unfortunately,
seminars have also become an area where the consumer must be wary. Before
you buy the product being marketed to you, be an informed consumer.
Do you know other people who have worked with this individual who can
tell you about their experience? Talk to your attorney, accountant,
or investment advisor, as the case may be, about the action the seminar
provider is trying to get you to take. Get all the facts you can. An
informed decision is usually a better decision.
________________________
While information in this article is
believed to be accurate, it is educational and general in nature, and
should not be construed as legal advice. Please consult your attorney
for specific legal advice. Yoder, Ainlay, Ulmer & Buckingham, LLP
© 2001
Yoder,
Ainlay, Ulmer & Buckingham, LLP