RICHMOND — Virginians should be cautious about unsolicited invitations to attend no-cost seminars that promise a fancy meal along with information about investment strategies and money management. The seminars, which frequently target seniors, often claim to teach attendees how to attain a secure retirement, earn excellent returns on investments, eliminate market risk, and avoid taxes.

The State Corporation Commission (SCC) urges Virginians to think twice before attending these “free lunch” seminars. “These programs may bill themselves as educational and may claim that ‘nothing will be sold,’ but many are actually sales presentations designed to push investment products and recruit new clients,” said Ronald Thomas, director of the SCC’s Division of Securities and Retail Franchising.

Although investment seminars can be a legitimate sales practice, many are not. They may tout fictitious products and grossly understate risk and exaggerate return. The speakers may present themselves as specialists, implying that they have particular expertise in addressing financial issues. In some cases, their designations are simply marketing devices and not meaningful credentials. The SCC has taken action within the past year against unregistered individuals who were holding such seminars in Virginia.

Among the products often promoted are variable and equity-indexed annuities. These are actually contracts sold by insurance companies that provide income payments on specified dates in return for premiums paid. Agents earn commissions from the sales of variable and equity-indexed annuities, which are generally long-term investment products.

SCC Commissioner of Insurance Alfred W. Gross urges Virginians to evaluate insurance products carefully. “In the case of annuities, make sure you understand their features, benefits and costs, as well as their vulnerability to stock market ups and downs. Compare them to other investment options when determining what best suits your particular needs and financial goals,” he said. The same holds true with securities offerings.

The SCC encourages Virginians to plan ahead before attending an investment seminar. “Do your homework before and after the program. Learn about the persuasive sales tactics that some of these seminars employ; ask questions during the program; and take time to thoroughly assess any opportunities presented to make sure they are right for you,” Thomas said. “When it comes to investments, one size doesn’t fit all. What’s right for one person may be totally unsuitable for another.”

Thomas cautions consumers who attend these seminars not to be pressured into making on-the-spot decisions about any investment opportunity or opening an account. Be prepared, too, for follow-up contacts from the seminar sponsor or leader.

In Virginia, insurance companies and agents are required to follow certain guidelines and make specific disclosures when presenting annuity products to consumers. The same holds true for securities broker-dealers and investment advisors and their agents and representatives when matching customers with investment products. These securities professionals are prohibited from using deceptive or misleading advertising or sales presentations. They also must make certain disclosures to investors and are prohibited from knowingly recommending unsuitable investments to a customer.

Thomas urges all investors to make sure that any securities or insurance products touted during a seminar are registered with, or approved by, the appropriate regulator and to determine the risks or costs associated with the product.

Virginians should call the SCC’s Division of Securities and Retail Franchising in Richmond at (804) 371-9051 or toll-free (in Virginia) at 1-800-552-7945 or visit its website at http://www.scc.virginia.gov/division/srf/index.htm. For questions or complaints regarding insurance companies, agencies, or annuities and other insurance products, contact the SCC’s Bureau of Insurance in Richmond at (804) 371-9741 or toll-free (nationwide) at 1-877-310-6560 or visit http://www.scc.virginia.gov/division/boi/index.htm.

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