Thursday, March 2, 2023

Barbservations From Online RMD Webinars

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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