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Regulation and Compliance > State Regulation > NASAA

Free-lunch seminars in the spotlight ... again

By National Ethics Bureau

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For the last few years, regulators have been targeting free-lunch seminars as potential vehicles for senior financial abuse. AARP and the North American Securities Administrators Association even launched a “seminar watchdog” program (SMA, January 2009), much to the chagrin of advisors who use such seminars legitimately. This torrent of negative publicity had many advisors wondering whether free-lunch seminars had a future in the senior market.

New AARP/NASAA research suggests the death knell was premature. According to the study “Protecting Older Investors: 2009 Free Lunch Seminar Report,” AARP and NASAA found that slightly more than 60 percent of respondents 55 years or older said they received a seminar invitation by mail. Among those who received an invitation by mail or e-mail, nearly six out of 10 (57 percent) had received five or more invitations within the past three years.

The survey also found that almost one in 10 survey respondents (9 percent) said they attended a free financial seminar within the past three years. This translates into nearly 6 million Americans over the age of 55.

Even though free-lunch seminars are far from dead, the AARP/NASAA study highlights the need for advisors to better communicate the objectives and subject matter of their seminars to older consumers.

Case in point: According to the study, 78 percent of seminar attendees expected the seminar to educate them about financial issues rather than try to sell them something (21 percent). However, almost two out of five attendees (39 percent) said their presenter tried to sell them a financial product either during or after the event. Half of the attendees said the presenter asked them for personal contact data or for information about their finances. And more than two out of five attendees (46 percent) said their seminar presenter attempted to make a follow-up sales appointment.

The study also found that annuities were a common topic at free-lunch seminars. In analyzing 180 reports from volunteer monitors, researchers found that two-thirds didn’t mention the surrender charges and tax penalties that may apply when annuities are surrendered early.

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