A few years ago I wrote a blog post about what I’ve learned from retirement dinner seminar invitations. It continues to be one of my most popular posts so I thought I would update it for 2021. So let’s get to it.
We’ve lived in our current house for about four years now. The people we bought our house from were selling this home to move to their “retirement home” out west. The first year most of their mail was forwarded to them. After the one-year period we started to receive a lot of their junk mail. One of my favorite items we receive are the invitations to “free” dinners at local restaurants put on by financial advisors. Something used to arrive about once a week. With the height of Covid we stopped receiving the invitations. However, now that we are closer to the end the invitations have started rolling in again, even though those people have not lived here for four years. Regardless, I have learned so much from these invitations. I figured it was worth sharing some of the key items I’ve learned.
- Did you know there are new rules to investing, especially when it comes to retirement? Unfortunately, I don’t know what theses new rules are as I need to attend the dinner to be educated. I wonder if they have anything to do with Bitcoin, dogecoin, GameStop or similar positions. Probably not and your guess is as good as mine.
- Apparently, I can “crash-proof” my assets and my retirement. Again, not sure how, but I feel as though I need to purchase some expensive insurance product that provides a healthy commission to the salesman. All I know is “crash-proof” sounds like a form of the G word in my world. The G word is the one word I was taught early on to never use. G stands for guarantee. The only “advisors” I know who use the G word are insurance-based advisors.
- Also, I can protect myself from market losses while still participating in the rise of the market. Talk about having your cake and eating it too! Again, my guess is this involves the sale of some commission-based product. The first type of product I think of when I hear this term is what is called a structured note. Short version is these products limit both your downside and your upside, but amazingly, the advisors selling these products still make a nice commission. I guess no downside for them.
- You must slap the word “fiduciary” all over the invitation. This seems to be key to establishing trustworthiness. I’m sure there is no reason to do a broker check on FINRA’s website to make sure this salesperson has no complaints against them though. Oh, and fiduciary in the true sense means an advisor must put your interests in front of theirs. A term used by non-fiduciary advisors is what is called best interest. The simplest explanation is if an advisor working under best interest rule has two recommendations for a client that would be appropriate and one just happens to pay this non-fiduciary advisor more, well, they are good to recommend that more expensive product. A fiduciary has to make sure the recommendation is not only appropriate but also the less expensive option.
- Only after I sit through a 60-90 minute presentation will I be allowed to eat. The seminars usually start at 6:30 and I’m going to be starving by the time the presentation finishes. Hopefully I can bring a snack. Otherwise, I may be so weak and bored I may fall prey to one of their sales pitches.
- My bad, these dinners are never “sales pitches” and “nothing will be sold.” Well, at least not at the dinner itself. I have a feeling there will be a lot of fear-inducing statements shared and pressure to set an individual, follow-up appointment. That follow-up appointment will simply be a free consultation though. I’m trying to think of what other types of professionals offer so many free dinners and consultations as financial advisors. Maybe I will eventually think of some.
- My personal favorite invitations are the ones where in the fine print it says something along the lines that if a financial advisor or attorney attends they host will charge them an educational fee that is usually in the range of a couple thousand dollars. Not sure how they think they will enforce that, but whatever. This is a huge red flag in my mind. It means the host or hosts are not wanting anyone to fact check them. I know of one local dinner seminar host who does this. It is a tag team effort between an insurance salesman and an attorney. I won’t go into details here, but if you ever want to know the full story you just need to buy me a beverage.
Those are just a sampling of what we’ve received at our house and also some invitations my clients have received and been kind enough to share.
I personally only know one set of clients who have attended one of these. Someone must attend otherwise advisors wouldn’t take the time and spend the money on them. I have heard stories the average dinner costs $5,000 for an advisor and 10-20 people attend. No wonder there is pressure to sell a product with a fat commission.
There are articles on a regular basis sharing stories from financial writers who have attended these dinners. It often is accompanying a parent or other loved one. The results are always the same – the writer is shown the door because they ask real questions at these presentations. Although we receive invitations at our house for someone else, I’m not enough of a jerk to show up at one, however, I do enjoy stories from my peers who do.
Now, if you attend these dinners just remember a few key things. If a product has to be sold instead of being bought, is it a good product? It may be cheaper for you to hit the all-you-can-eat night at the local wing restaurant than attend a “free” dinner at a nice restaurant. Finally, nothing’s more expensive than free.
NEVER UNDERESTIMATE ANYONE
Today’s flashback is to grad school and a quick lesson in never underestimating people. Again, this is a short episode so I am just going to keep it brief.
My grad school program was known as a data driven program. We were all numbers people. There was a classmate who used to never say anything in class. I think I talked to her maybe once and she was super quiet. As a bonus, I was in grad school in the mid-90s and she had some big old hair. If you are of my GenX generation you know what I mean. If you looked at her you might think the reason she didn’t participate in class is because she was having a hard time keeping up. I found out that was the complete opposite.
We were nearing the completion of our second year when I learned she had not missed a single question in any of our finance classes. To top it off, her thesis was being used by her bosses even though she was an intern and a full-time student still.
So, even though she sat quietly in class with true GenX hair, apparently she was just bored with class. I guess being in a top-10 program wasn’t quite challenging enough for her.
I use this story with my kids when I tell them to never underestimate anyone. It was a lesson I learned directly.
As always, thanks for taking the time to read this. Please do not hesitate to reach out if I can be of help with your equity compensation-related questions. The easiest thing to do is to click the little green box that reads “Schedule a Meeting” that can be found at the bottom of every page on my website. Or, just click my Calendly link right here.
I’m Dan Johnson, CFP®, founder of Forward Thinking Wealth Management. I run a flat-fee financial planning and investment management firm located in beautiful Akron, OH. Although I am in Akron, OH, I work with clients regardless of location. I cater to owners of equity compensation positions who are looking to organize their financial lives, keep more of what they make, and do the things they want in retirement and even now.