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“Free Lunch” Investment Seminars Not Always Only About Education

According to “Save and Invest”—a website and newsletter run by FINRA’s Investor Education Foundation—over 6 million Americans 55 and above have attended a “free lunch investment seminar.” But as FINRA also notes that these seminars are often less about education than they are about sales.

“[A]ttendees are often pressured into making unsuitable—or even fraudulent—investments,” FINRA warns. “If you, or a friend, neighbor or relative accepts an invitation to one, make sure you all know which red flags to look out for before you go.”

The Ubiquity of Investment Seminars

These seminars are everywhere. In addition to the above-cited figure, FINRA points out that four out of every five investors age 60 and over received at least one free investment seminar invitation in the preceding three-year period. Perhaps even more startling is the revelation that three out of five of these investors received six or more invites in that same time frame.

True, only about 25 percent of those invited actually attend these seminars and only about nine percent of attendees buy what presenters are selling. Certainly, there are good reasons to attend these seminars, whether an investor is truly interested in learning about the product or just because of the prospect of some free food. Still, investors are encouraged to arm themselves with the ability to discern objective information from a sales pitch.

Learning the Tactics of Persuasion

FINRA mentions five selling tactics, “both legitimate and not-so-legitimate,” that sellers use to entice investors at these seminars. First, attendees should be wary of what FINRA calls “phantom riches.” Meaning, if a seminar presenter dangles significant, but vaguely described wealth, in front of the investors, it is worth being at least somewhat suspicious. Second, presenters may provide impressive sounding credentials, in efforts to gain the crowd’s trust. While fancy-sounding titles may sound credible, they might also be more smoke and mirrors than illustrations of trustworthiness.

Presenters may also try to make an investment sound attractive through so-called “social consensus.” Here, sellers describe how others got rich on this particular investment too, painting the investment as a well-traveled path to success.

Fourth, presenters offer some benefit to attendees, from a free lunch to reduced commission fees by brokers. These benefits may seem harmless. But they can also impose a sense of obligation on the investors; the pressure to reciprocate the “favor” may be what pushes an attendee to invest. And finally, FINRA urges investors to beware of claims of scarcity, i.e., creating a trumped-up sense of urgency by discussing the limited number of shares left available to buy.

While such seminars can, indeed, present investment opportunities in good faith, attendees are always best served by educating themselves about the products being offered and about those offering them. FINRA recommends investors do their homework ahead of time, ask questions during the presentation, and—importantly—decide on whether to invest later, after they’ve had a chance to do more research after the seminar.

If you were sold an investment after attending a free lunch seminar and have a question about that investment or the free lunch seminar or if you believe that you may have been the victim of fraud or financial exploitation, please contact attorney Gregory Tendrich, P.A. today.

Gregory Tendrich, PA
Gregory Tendrich, P.A. serves clients throughout Florida, including the cities of West Palm Beach, Palm Beach, Delray Beach, Boynton Beach, Boca Raton, Port St. Lucie, Lake Worth, Wellington, Riviera Beach, Palm Beach Gardens, Fort Pierce, Vero Beach, Hobe Sound, Jupiter Island, North Palm Beach, Lake Park, Lantana, Stuart, Palm City, Jensen Beach, Tequesta and Juno Beach and represents clients in Palm Beach County, Martin County, St. Lucie County, Indian River County and throughout Florida.

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