Investment Candy From Strangers

By Martha M. Hamilton
Sunday, October 1, 2006

Maybe it was the hot pink envelope that made her suspicious.

When I stopped by my mother's apartment recently, she asked me to take a look at a mailing she had received.

Addressed in a type of print that mimics handwriting, it contained a "special invitation" to a women's financial seminar.

"Because you were referred to me, I wanted to personally invite you as my VIP guest to hear my story and be trained by '4' of my personal mentors, who are some of the wealthiest, self-made multi-millionaire experts in America," wrote the sponsor, waiving the "normal tuition fee" of $149 for the event at the Ritz-Carlton hotel at Tysons Corner.

My mother had correctly identified the invitation as junk, although she set it aside for a second opinion because of her failing eyesight.

As it turned out, I was special, too. And so was Lori Richards, director of the Securities and Exchange Commission office that oversees brokers and investment advisers. We all got the exact same pitch -- pink envelope and all -- from an outfit that has been the subject of at least two Better Business Bureau warnings.

Hucksters have targeted retired investors forever, hoping to capitalize on their lifetime savings. And now a large new opportunity looms.

"When the boomers start retiring with those 401(k) lump sums, it's going to make the gold rush look like a little gathering of two or three people. There are going to be more thieves out there," said Martha Priddy Patterson, director of Deloitte Consulting's benefits consulting practice. "Every time I think about it, it gives me cold chills."

Some of us may even become targets before we retire, as we grow anxious over whether we should be getting more bang for the bucks we have set aside. According to Richards, that may be in part because we're reading in the papers: "Are you ready? Are you ready?"

"Those are probably the people who are going to be more aggressive and more assertive in trying to take risks," Richards said.

That may translate into a willingness to say yes to new investments or an "investment seminar" that could be hazardous to your financial health.

If you're trying to educate yourself on investments, it may seem reasonable to show up for an investment seminar, even if it's being pitched by someone with whom you have no financial relationship. But one of the easiest ways to avoid fraud is to refuse to listen to pitches from folks you don't know.

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