Seniors Targets of Financial Charlatans
Seniors in your community may be targets of financial charlatans. I’ve received a number of disturbing reports recently from seniors about the abusive tactics of some advisors. Their actions are not only unethical, but they border on the criminal. You must be aware of these despicable tactics so you and your nest egg are protected. “Guarding Your Wealth” is a nationally syndicated weekly personal finance column written by Jeffrey D. Voudrie, CFP. Mr. Voudrie is the President of Legacy Planning Group, a private wealth management firm that employs sophisticated proprietary strategies designed to protect and grow its clients' investments. Please visit our website, www.guardingyourwealth.com to read past articles in our archive.
(PRWEB) March 21, 2005 -- Seniors in your community may be targets of
financial charlatans. I’ve received a number of disturbing reports recently from
seniors about the abusive tactics of some advisors. Their actions are not only
unethical, but they border on the criminal. You must be aware of these
despicable tactics so you and your nest egg are protected.
A charlatan is
defined as one who attracts customers with deceptive tricks. They look for easy
marks and quick profit. Equity Indexed Annuities have a high commission and a
sales pitch that is enticing to risk-averse seniors, so they are often used by
these shady advisors.
Even though I am against Equity Indexed Annuities,
I do not believe that everyone who sells them is a charlatan. Many advisors are
trying to offer an investment that they believe is in their client’s best
interest. There are a large number of advisors, though, who are unscrupulously
taking advantage of their client’s trust.
Warning 1: Any advisor who
recommends 100% of your investable assets be placed in ANY investment or
investment category is looking after their own interests, not yours. Beware of
following any of their recommendations.
For example, John (not his real
name) is 80 years old and lives in a retirement community in south Texas. There
are over 2,000 other retirees in his community and 5 similar communities next to
it. Since seniors and retirees are the ones with money to invest, these
communities are heavily targeted by advisors in search of a
commission.
These advisors start by offering free pizza and a seminar at
the local community center. Who doesn’t like free food, especially when you’re
living on a fixed income? Lots of folks enjoy the food and listen to the pitch.
In John’s community, these charlatans then started going door-to-door
pushing an investment they portray as a way to avoid income tax, avoid probate,
and earn a safe, risk-free return. John, like his neighbors, was skeptical at
first. It sounded too good to be true.
The advisors were relentless.
They kept showing up at his house, calling him on the phone and wooing him with
the wonderful benefits he would enjoy. In the end, they convinced him he needed
to invest ALL of his money into an annuity contract lasting 10 years. He sold
stock he’d held for decades and invested that so he would pay less income tax.
These charlatans used John’s fear of paying taxes and losing money in
the market to trick him into a decision that he already regrets. They seemed so
genuine. The more they talked the more confused John became. Surely any second
thoughts he was having were just his fault.
Warning 2: Never sign any
paperwork without first reading it and taking the time to fully understand
everything it says. If you are confused, seek a second opinion.
John
signed their paperwork—and wasn’t even aware of what he was signing. They didn’t
give him time to read it and, not being a sophisticated investor, he wouldn’t
have understood it if he had. The papers he signed are designed to protect the
advisor from legal liability for their actions. Those papers place all the
responsibility on the investor and are like a get-out-of-jail-free card for the
advisor.
The consequences of John’s decision are painful and difficult.
By selling stocks he’d owned for years, he will now end up paying capital gains
taxes he otherwise wouldn’t have had to. He is currently in the lowest tax
bracket anyway. In the long run, he will end up paying more in taxes with the
annuity, not less!
Now John has very little access to his money. Even if
he dies, it is likely his heirs will have to pay significant surrender penalties
to get money out of the annuity. If John needs or wants his money several years
down the road, there is a good chance he will get back less than he invested
because of these penalties.
This unethical behavior would not be
tolerated by the SEC. But Equity Indexed Annuities aren’t regulated by the
federal government. That lack of oversight opens the door for financial
charlatans to take advantage of unsuspecting seniors.
If you suspect you
or someone you care about is being a target of such schemes, please contact me
for free, unbiased advice on what you can do at e-mail protected from spam bots.
Mr. Voudrie is a Certified Financial Planner, nationally syndicated
columnist and President of Legacy Planning Group, Inc. in Johnson City, TN. He
can be reached toll-free at 1-877-827-1463.
Looking for an energetic
expert who is passionate about financial and wealth management? Mr. Voudrie is
an excellent speaker who will excite and inspire your audience. Mr. Voudrie is
available for a limited number of speaking engagements, television appearances
and radio talk shows. For booking information, email e-mail protected from spam
bots.
Related Articles can be found at www.guardingyourwealth.com under the Guarding Your Wealth
Article Archive:
Equity Indexed Annuities: There Are Better Growth
Alternatives
Equity Indexed Annuities: There Are Better Alternatives
(Stability)
Better Alternatives Than Equity Indexed Annuities
Equity
Indexed Annuities: Agents Prey On Unsuspecting
Consumer Alert: Equity Indexed
Annuities
Rising Interest Rates: Another Reason to Avoid Equity Indexed
Annuities
# # #
Source : http://www.prweb.com/releases/2005/3/prweb219693.htm