Free Steak Dinners
You know you have reached a “certain” age when you start getting mail from AARP and dinner invitations for a FREE STEAK DINNER. Generally, these invitations are from investment and insurance advisors but occasionally they come from funeral homes selling pre-paid funeral services.
I don’t have any issues with AARP. Their magazine is filled with useful information and I will take any discount I can get! A dollar off a movie means I can spend more on candy! But you should be cautious on the hidden costs of free steak dinners seminars from advisors.
Generally, these are ways for advisors to get in front of qualified prospects. That alone is not a bad idea. Advisors want to demonstrate to multiple people at a time their grasp on issues and their credentials. However, many are using these free meals as a way to scare people into buying expensive products they don’t understand or need.
So, how do you know if you are in front of a good advisor or a not so good advisor? Look for a few signs. First, was the dinner designed to “scare” you? Was there a lot of talk about how the market could fall ANY minute and you be left with nothing? And the only solution was a product that could give you all the upside potential and none of the downside risk? Translation- the product being pitched is an annuity. Or was it a talk about how you could put lots of money into a tax deferred product and pull it out tax free? Translation- a life insurance product.
I have a saying, there is not such thing as bad products, just bad salespeople. None of the products pitched in these dinners are bad per se, but are they pitching them to you because you need that product or because the advisor makes a hefty commission?
Ask the following questions when considering buying a product pitched at one of these dinners: what is the commission you will receive if I buy this? (If they say there isn’t a commission, they are lying). How long is the surrender charge for this product? (Most have surrender fees from 3-10 years) How do I get money out of this if I need it for an emergency? How does this fit into my overall financial plan? What are the tax ramifications if I take money out early?
A good advisor will have no problem sharing with you the answers to these questions. And if you are not getting answers that make you comfortable, run. It may end up being the most expensive free steak you ever ate.