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In a recent evening in San Diego, in a glass office tower along one of the city's most affluent stretches, Toni Elbrecht, a retired purchasing-department manager, is waiting for a seminar on retirement planning to begin. Off to one side sits the bait for the evening; a free meal of steaming lasagna and a salad tossed in a bowl as big as a sink. About two dozen other retirees or would-be retirees are milling about. Something of a veteran of the retirement-seminar circuit, Ms. Elbrecht, age 60, already has heard tonight's speakers once before, and she was impressed. They didn't tell corny jokes. They didn't try to push a particular product. And they didn’t compete with a monkey. She explains that at one seminar a broker and his flamboyant sidekick announced that they were locked in a contest with a monkey to see who could pick the best stocks. “When I heard the monkey was doing better,” Ms. Elbrecht recalls, “I wasn’t interested in them.” And so it goes in the increasingly cutthroat business of retirement seminars. If you haven’t been invited to one yet, just wait. A growing army of brokers, financial planners, accountants, and lawyer – equipped with a smooth delivery, a pile of charts, free food and the occasional monkey – are hungry for your business. Retirement communities are pelted with invitations for free seminars. Brokerage firms buy mailing lists from personal-finance magazines to ferret out prospective seminar attendees ages 50 and up. If you’re willing to pay for advice, you can book passage on cruise ships that double as floating financial classrooms. As they ply the waters of the Mediterranean and Baltic seas. The boom in the let-us-help-you business reflects fundamental changes in the finances of retirement. Not long ago, most employees’ retirement money was wrapped up in their pensions. There wasn’t anything complicated about retrieving a monthly check from the mailbox. But in recent years, with the popularity of 401(k) and similar plans, much more of the responsibility for managing money in retirement has been dumped in individual’s laps. Beyond deciding how best to nurture their nest egg, people also must wrestle with questions about medical and life insurance, Social Security and estate planning. Meanwhile, Americans continue to smash the assumptions of actuarial charts; as they live longer, their financial decision-making becomes all the more important. Amid all this, retirement seminars can indeed be helpful. At their best, they can start you thinking about all the issues you need to face. A good seminar is like an hors d’oeuvre: It won’t fill you up, but it can whet your appetite for more. But before you send in an RSVP for one of these events, consider the following: Not ever talking head clutching a microphone is worth listening to. The credentials of some speakers may be thinner than a computer chip. The agenda for many of them is simply drumming up new business. And some of the sales pitches are designed so cleverly that you might never see them coming. What’s billed as a retirement seminar, for example, could really be an offer for life insurance, annuities or living trusts. “The main thing you want to do at these seminars is to keep your wits about you.” Advises Don Phillips, president of Morningstar, Inc., the Chicago mutual-fund research firm. “I would go to look for ideas and different opinions, but I wouldn’t go to them looking for easy answers. The more someone is trying to persuade you that they have an easy answer, the more skeptical you should be.” As a popular headliner at investment seminars, Mr. Phillips has observed plenty of gullible audiences. He remembers peering into a cavernous room at one investment conference and spying a smart municipal-bond fund manager speaking to rows of empty chairs, while just next door hundreds of people had pushed their way in to hear a promoter tout a highly speculative energy partnership. At some seminars, scantily clad women lure investors into presentations. And there’s always the bribe of food. Only half-kidding, Mr. Phillips says the size of the shrimp that financial sponsors or more dubious investment vehicles serve in their hospitality rooms can be a tip-off that something is fishy. “The bigger the shrimp,” he suggests, “the bigger the rip-off.” What follows is a look at some specific parts of the seminar business – what you’re likely to hear, and how to guard yourself against bad or misleading information. Credentials Luckily, there are ways to protect yourself before you ever walk through the door. First, know who is going to be talking. At some conferences, a speaker will simply bill himself or herself as a retirement planner, a broad term that’s essentially meaningless. If you are invited to a seminar or see one advertised, call and ask the sponsor to send you the biography of the speaker and the firm, suggests Katherine Vessenes, an attorney in Bloomington, Minn., who frequently advises financial institutions on ethical and compliance issues. The material should include how long the person has been in the financial industry, his or her area of expertise, as well as a list of credentials and education. While you’re at it, adds Ms. Vessenes, contact the National Association of Securities Dealers (NASD), which regulates the securities industry, to learn if the presenter or the firm has ever been in trouble with regulators. The NASD can be reached at 800-289-9999 or by visiting its Web site at www.nasdr.com. Presentation Brokers or financial planners aren’t free to blurt out whatever they like when they invite in the public. If a speaker is regulated by the NASD, his or her script may require the regulator’s seal of approval. Before it ever gets that far, a financial institution’s in-house compliance department is supposed to screen scripts for any unacceptable claims. But the key words there are “supposed to.” Ms. Vessenes suggests that the majority of investment representatives are ignoring this requirement. “Of course, that means for the poor investor, there is no safeguard,” she says. “We don’t know what these reps are saying; they could be saying anything.” What you can do is listen for words like “guaranteed,” “sure thing” and “risk-free” in a retirement presentation; there are, of course, no such investments. Also pay attention to any promises, especially when a graph or chart indicates what will happen to an investment in later years. When Ms. Venneses was recently reviewing a seminar script for a company, she struck this offending language: “If you use this investment technique, you will quadruple you money in the next four years.” The sentence was unacceptable because no one can predict what return an investment can generate in the future, Ms. Venneses says. Instead, she substituted: “With this investment technique, there may be opportunities for significant improvement in your portfolio.” Sales Pitches Now you see it, now you don’t. Sales
pitches in retirement seminars rarely look or sound like sales pitches.
Imagine, for example, going to a conference where the speaker
enthusiastically explains how you can boost your future pension income.
You may sit through the entire discussion without ever realizing
that the host is talking about a controversial strategy called
"pension maximization," which requires the purchase of life
insurance. It's a
sometimes-risky approach that could leave a spouse without a pension
after his or her partner dies. "At
these seminars, there may be no overt mention of life insurance, but
that's what ends up being sold," says Peter Katt, a fee-only
life-insurance adviser in West Bloomfield, Mich. Perhaps
the best advice is to recognize that sales pitches -- subtle and
otherwise -- invariably are part of almost every retirement seminar.
Rebecca Frasher, who is in charge of retirement education for the
State Teachers Retirement System in Ohio, says she's had little luck in
the past persuading guests, who spoke for free, to drop their sales
pitch. "Even though
you have assurances that they won't sell anything and you have
assurances about what they're going to talk about, it's amazing what
happens when they get in front of a group of people," she says.
"It changes. They tell me they won't sell, but they do." At
the seminar in San Diego where Mrs. Elbrecht spends an evening, a trio
of brokers from Salomon Smith Barney are addressing the audience.
One of the brokers presents a standard pie chart illustrating how
little of a typical retiree's income comes from Social Security.
There's talk about how a diversified portfolio can reduce
volatility, as well as the best way to evaluate mutual funds.
So far, so good. But
the speakers seem eager to paint their discount-brokerage competitors as
havens for kamikaze investors who are hell-bent on making reckless stock
bets. "If you're an
aggressive investor, go with the discount brokerage firms and trade like
crazy,” advises Scott Gleason. A couple of women in the front row nod their heads
enthusiastically when Mr. Gleason suggests that anyone who can't afford
to lose money that way would feel more comfortable with his firm. Tailoring
his message to a hometown crowd that had recently watched the San Diego
Padres win the National League pennant, Robert Taylor, another of the
brokers, observes, "We're not trying to hit homeruns; we're trying
to hit a lot of singles and some doubles.
We're trying to be the Tony Gwynn of retirement planning."
(Mr. Gwynn is an outfielder for the Padres and one of the most
consistent hitters in baseball.) When
asked later about the seminar's content, Mr. Gleason says the event
"isn't meant to be a sales pitch in any way.
We want to make people feel comfortable and trusting of the
[Salomon Smith Barney] retirement group.
We aren't trying to sell anything in particular." Some
of the firm's guests for the evening take the presentation in stride.
"The seminar was a little short on meat and a little long on
sales pitch," observes Bill Gray, 60, a retired Pacific Bell
manager and a self-described satisfied client of the firm.
"They should have picked fewer subjects and gone more
in-depth. But this seminar
would have been a very good one for someone who is just looking into
investing and not familiar with the terminology." If
you do decide to take a seminar speaker up on a sales pitch, remember to
find out how he or she is being paid; by one-time, upfront fee or
commission or a combination of both. Diane
Mac Phee, a certified financial planner in Montclair, NJ, says that she
has listened to plenty of people who, after attending free seminars and
complimentary follow-up consultations, think the freebies last
indefinitely. That isn't
true. You will end up
paying one way or another. "Some
brokers never explain the commission schedules, or it all gets blurred
when the clients are signing the papers," she says. Information
Overload One
potential drawback with any seminar is information glut.
There is typically just too much to cover and absorb.
Consequently, financial advisers say you shouldn't expect to
leave a seminar and know whether, say, you should take your pension in a
lump-sum distribution. Many
advisers suggest that you use these seminars only as a starting point.
"If you can pick one nugget of information, go for it,"
suggests Dee Lee, a certified financial planner and financial educator
in Harvard, Mass. "If
you can learn one thing, it can be worth your while." Mr.
Gray, the retired Pacific Bell manager, who estimates that he has been
to a dozen or so seminars, agrees.
"The first one you will go to will be like a blizzard, when
you hear all sorts of terms. But by the fourth or fifth one, you'll become comfortable
with the language. That's
what happened to me." Wall
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