This retiree accepted the salesman’s invitation to dinner at Ruth’s Chris – a decision that cost him $158K.
There’s no such thing as a free lunch — or a free steak dinner at Ruth’s Chris Steak House, for that matter.
At least, that’s what one retiree learned the hard way, after a trip to a restaurant cost him a large chunk of his savings.
Authorized investors can own a Walmart, Whole Foods or Kroger — and benefit from regular distribution without lifting a finger. Here is the process
Car insurance costs in America are through the roof – and they’re getting higher. But less than two minutes can save you more than $600/year
These five magical money moves will propel you up America’s net worth ladder in 2024 – and you can complete each step within minutes. Here is the process
George Wilson, who shared his story with Business Insider, said he sometimes attends free lectures — usually held at a fancy restaurant — on how to finance retirement.
He hadn’t made any plans until that fateful night in 2010, when he went to a presentation at Ruth’s Chris and met broker David Escarcega.
Escarcega encouraged Wilson to invest in a financial product from GWG Holdings, a company now in bankruptcy. The highest level of protection is based on life insurance purchased on the secondary market, according to Business Insider.
While traders like Wilson earned 9% monthly returns, traders were earning up to 8% in commissions from GWG.
Long story short, GWG’s insurance contracts were oversubscribed and, after an investigation by the US Securities and Exchange Commission (SEC), GWG filed for bankruptcy in 2022 and suspended dividend payments.
The dinner (and Wilson’s investment decision) ended up costing him $158,000 of his retirement savings.
Wilson’s first few years went well, with regular monthly income, and in 2017 he improved his income. But at the time, unbeknownst to Wilson, Escarcega had been banned from selling securities after misrepresenting the risks of investing, according to the Financial Industry Regulatory Authority (FINRA), an independent regulatory agency.
More than a decade after that dinner, Wilson is still fighting to get his money back.
Although the most recent decision awarded him $267,252 in damages, including emotional distress damages, all of the plaintiffs received $103,000 in damages. So, after costs, Wilson has not been able to recoup his initial investment.
Hosting a “free” lunch or dinner is common in the industry: taking potential customers out of luxury dining and putting them on investment opportunities (usually high-commission, high-risk products).
While this doesn’t mean that all advisors and all “free” meals are dodgy, it does mean that you shouldn’t be tricked into investing your retirement savings with top sirloin steak. If something seems too good to be true, it probably is.
If you’re considering a particular investment strategy, you need to be well-informed to know what you’re getting into. In the case of GWG, there were red flags, but a rookie investor wouldn’t catch them, especially after a few years of high returns.
But, in general, if yields continue to grow, then there is an opportunity you are taking a risk that you may recognize.
Read more: Jeff Bezos and Oprah Winfrey invest in this property to protect their wealth – you may want to do the same in 2024.
A good advisor can be invaluable in helping you protect and grow your retirement savings. But how do you get it?
First, understand the different types of consultants out there. A fee-only advisor charges a service fee (usually hourly or annually, or a flat rate) and receives no commission on the sale of investment products.
A financial advisor may also charge a commission fee, but they may be earning a commission (which may affect their advice).
If you are no pay for service – and you’re getting free food at fancy restaurants – so you should proceed with caution.
The National Association of Personal Financial Advisors (NAPFA) can help you find advisors in your zip code.
You can also ask family and friends, but you will have to be careful, as Wilson also advised his ex-wife and friends to invest with GWG. Ask the potential advisor about their credentials, if they are a fiduciary and if they earn a commission.
Then, do your research. If, for example, an advisor holds the Certified Financial Planner (CFP) or Chartered Financial Analyst (CFA) designation, they must act as a fiduciary, which means putting their clients’ interests before their own.
They must also follow the code of conduct; otherwise, they lose their name. These certifications can be certified by the CFB Board or the CFA Institute.
FINRA also has a search tool called BrokerCheck where you can see if any disciplinary action has been taken against an advisor; it also has a list of banned brokers.
Before investing a chunk of your retirement savings in any other investment, it helps to get a second (or even third) opinion.
This may mean talking to a Certified Public Accountant (CPA) or even an attorney. And, the next time you’re invited to a “free” meal, you might want to think twice.
This article provides information only and should not be taken as advice. It is provided without warranty of any kind.
