from – Villages-News.com – by Staff
Subtitled “No Free Lunch,” the non-profit AMAC Foundation seminar on “Fraud Protection and Investor Behavior” was presented as a public service. Over one hundred attendees filled the Pinellas Public Library conference room to capacity to hear retired financial expert, Rich Miles’ spirited presentation.
Just about every senior in The Villages and surrounding communities receives dozens of ‘free dinner’ or ‘free lunch’ invitations each year from firms who claim they have the best answers for retirement planning. Many are ethical firms who provide valuable information and services. But how does one know whom to trust with their life savings?
When the U.S. Securities and Exchange Commission (SEC) surveyed 110 such American firms’ programs in 2007, virtually 100% of them had hidden sales agendas for their financial products or services. Further, the SEC found 59% had weak supervisory management practices; 50% used exaggerated or misleading advertising claims; 23% recommended investments which were likely unsuitable for their senior clients’ best interests and 13% were ‘just plain fraudulent.’
Retired financial advisor, Rick Miles, gave a ‘from the head and heart’ account about investment fraud. “Is it any wonder so many retired Americans become victims of fast-talking, clever scammers?” Miles asked his audience. “American investors lose over $50 billion every year to fraud. Seniors are the most likely group to be targeted — but we don’t have to become victims.”
Miles revealed his own devastating financial losses when a fraudulent scheme in which he invested highly leveraged funds collapsed. “I lost all my money, and so did my friends. And I lost my family,” he said wistfully. “I am well educated; I thought I was smart, and this happened to me. I want to help prevent that from happening to others.”
The goal of the AMAC Foundation’s session was to help seniors recognize ‘red flag warnings’ when investing their money; and provide readily available, reliable online resources where they can learn more about investment principles and check out financial advisors and firms. “We retired seniors have a unique opportunity to help educate each other, and also our adult children and young people about responsible investing,” Miles said.
So many people invest hard-earned money based on recommendations of trusted brokers, family members, a CPA or an attorney — without doing any research themselves. Many so-called ‘tips’ come from honest individuals trying to share what they think will bring increased wealth — but no investment is guaranteed. “Few people, if anyone, have become really rich investing in ‘penny stocks,’” Miles added, “and the claim that the tremendously successful Wal-Mart and Microsoft Corporations were launched as penny stocks is simply untrue.”
Miles pointed out many ‘red flag warnings’ to watch for when thinking about investing. Celebrity endorsements, which may or may not be true, entice people. Faux urgency, limited time offers and ‘get rich schemes’ are all major ‘no-no’s.’ “If it sounds too good to be true — it IS! It’s amazing what you find written in the fine print — exorbitant hidden fees , surrender charges and disclaimers — but most of us don’t read it. We are too trusting,” Miles said. “We want to believe, and we let our emotions get in the way of wise decisions.”
Miles urges portfolio diversification to spread our risk; and to be cognizant of banks’ $250,000 insurance limits . “Don’t hesitate to invest money in more than one bank so it is all insured. Use only registered broker/dealers, and check their history and background carefully at www.FINRA.org. ”
“An unregistered sales rep selling securities is committing an illegal act,” Miles asserted. “Just don’t deal with them — ever.” And while he is an advocate of limited government, he heartily recommends the website www.investor.gov to learn or review basic investor principles. “Build your investor confidence based on unbiased knowledge — don’t be intimidated!” He also mentioned sec.gov, (the Securities & Exchange Commission website), loc.gov (for Library of Congress educational materials); and the SEC’s EDGAR (Electronic Data Gathering, Analysis and Retrieval) data base.
“When actor, William DeVane, starred in 2008 TV commercials touting precious metal investments, he was selling the ‘ stability ‘ of gold. Stability is what we all want, yet the price of gold has plunged and the S&P 500 stock index has surged since that year. There is no easy answer out there. Investing can be confusing — even to professionals, Day traders mostly end up with losses.”
Miles outlined a continuum of emotional investing — starting with optimism, thrills and excitement — even euphoria; then often moving to anxiety, denial, fear and panic when an investment goes bad. There is sometimes despondency and depression, but riding market cycles, which often appear schizoid, one can perhaps get back to hope and optimism once more.
SCAM can be an acronym for Scheming, Crafty, Agressive and Malicious — adjectives which describe the more fraudulent operators at the fringes of a generally ethical investment industry. “Have a short and long term plan,” Miles advises. “Don’t be afraid to ask questions. Ask about fees — how does the brokerage firm make its profits? If experts are reluctant to answer your questions, run. Older adults need to be especially careful not to lose money, because we don’t have the working years ahead to recoup major financial losses. Don’t get scammed!”
Lady Lake (Harbor Hills) resident, Dan Weber, who is the Founder and CEO of AMAC (the Association of Mature American Citizens), and the organization’s Executive Director, Gerry Hafer, were on hand. For residents who were not able to attend today’s seminar, it will be repeated on Thursday, Oct. 16, from 10-11:30 a.m. at the Pinellas Library. Other vital future public service seminars are planned — including “AMAC Connects — Senior Technology Education; ” an Adult Literacy Program and a “‘Medicare Fraud Alert ” seminar to help seniors identify unscrupulous Medicare sources.
Billed as ‘the voice of Americans 50+’– AMAC offers ‘a more conservative alternative perspective’ on how seniors can best solve the problems they face today. Founded in 2006, AMAC is a national organization with 1.3 million members to date — and growing rapidly. They publish a quarterly magazine of interest to seniors , and offer many insurance, travel and national product discounts to members. For more information about AMAC, visit www.amac.us or dial 1-888-262-2006.