After I left New Jersey and was no longer a recognizable figure as a financial educator for Rutgers University, I attended a few free meal seminars “undercover” in my new home state of Florida. Few people here know about my financial education work and I knew I wouldn't be "outed" and asked to leave because I'm a CFP(R).
Knowing that these seminars have been linked to an increased risk of abusive sales practices, if not outright investment fraud, and having read a detailed expose’ by Helaine Olen in the book Pound Foolish, I was curious to see the sales techniques used by the program organizers up close and personal.
Last year, I noticed a new trend that has continued into 2023: ads on social media about online financial seminars focused on required minimum distributions (RMDs) and income taxes owed in later life. In other words, no free meal; just the seminar…and the sales pitch. Curious as I was before, I attended 4 or 5 of these online seminars. Below are some of my “Barbservations”:
Canned Presentation-
After viewing several webinars, I noticed that the event organizers were using
the same slides and reading the same script, along with personal tweaks, of
course. There must be a “central source” that provides program materials to
event organizers. Unfortunately, some webinars that I viewed were not updated
with latest (2022) IRS life expectancy factors.
Pesky Pop-Ups-
Throughout all of the presentations, there were pop-up boxes on the screen
encouraging viewers to sign up for a free consultation. This was very similar
to postcards or door prize entry forms passed around at in-person seminars. In both situations,
completing the forms was optional.
Scary Tactics-
The webinars began with an image of a “tax train” about to run people over and
the specter of the highest marginal tax bracket once again being 91% as it once
was in
the past (1951-1963). The colorful term “tax torpedo,”
conjuring up a large explosion, was used to describe how a small income
increment can result in a big increase in income taxes.
More Scary Tactics-
A few that I noted were: “One or two bad years and your money is gone,” “massive
amounts of government debt will cripple us,” “Uncle Sam is money hungry,”
“taxes have no place to go but up,” and references to “Biden’s taxes,” to stir
up some angry political undertones. Some presenters, no doubt prompted by a written
script, also ripped up a sheet of paper several times to graphically illustrate
the loss of $1million in savings due to taxes.
Teaser Tools-
Some presenters offered free resources- but only to webinar viewers who made
appointments for a consultation. These included an e-book, and something called
“safe money tools.” One speaker also disparaged so-called “steak dinner guys”
while acting just like them.
Kernels of Truth-
Wrapped up in the colorful language and scare tactics was accurate core
information: 1. Tax diversification throughout one’s working years can reduce
taxes in later life, 2. Roth conversions and charitable gift planning (e.g., Qualified Charitable Distributions or QCDs) are strategies to reduce taxes, 3. RMD divisors grow by almost a factor of 1 every year,
4. Setting up automatic withdrawals with plan custodians can help avoid missed
RMDs and tax penalties, and 5. Interest and/or dividends from investments should, ideally, satisfy RMDs, at least initially, with no impact on invested principal.
Bottom line:
Be as cautious when attending online seminars as those that include free meals.
This post provides
general personal finance or consumer decision-making information and does not
address all the variables that apply to an individual’s unique situation. It does
not endorse specific products or services and should not be construed as legal
or financial advice. If professional assistance is required, the services of a
competent professional should be sought.
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