Financial Educator suggesting 9-12% return with Capital Preservation strategy

[RamStride]

A couple friend had their first ever meeting with a person to go over finances and investments. They met with a financial 'educator' not a 'financial advisor'. Apparently, this educator is not a CFP and only educates people about finances using a book the company that he represents uses. Looking more into the company it appears it is a Multi-Level Marketing (MLM) financial education and referral business.

The educator told my friends that at their age 67/58 and current 401k allocation that they should consider a 80/20 AA using a capital preservation strategy. The AA part is subjective the suggestion is sound.

What was surprising was that the educator mentioned they should invest in a capital preservation strategy that would 'guarantee' a minimum of 9% and a max of 12% ROI. The educator did not provide any details about the investment. That sounds like a growth type investment rather than capital preservation. Is there such an investment? I told my friends they need more details.

 

[mrfeh]

The "educator" is obviously a scammer. If anybody starts saying "9% guaranteed", it's time to walk out.

 

[Flyfish1]

Madoff!!

 

[pb4uski]

Run!

 

[pjm-7]

They need to check the educator's licenses with FINRA, their state's securities division and state insurance commission. This person is probably not registered with any of them. They need to find a person who has the proper credentials. Whatever is being sold they need to run very far, and fast.

 

[RamStride]

I searched the educator's name in Brokercheck. He is listed. Series 26/6/63/SIE. But I don't know how to interpret all the details.

 

[MichaelB]

I searched the educator's name in Brokercheck. He is listed. Series 26/6/63/SIE. But I don't know how to interpret all the details.

When someone guarantees between 9%-12% and uses the term capital preservation, there’s not much to interpret. The previous responses are all correct. This is bogus.

 

[RamStride]

We all share the same thought. Thank you all.

 

[Koolau]

A couple friend had their first ever meeting with a person to go over finances and investments. They met with a financial 'educator' not a 'financial advisor'. Apparently, this educator is not a CFP and only educates people about finances using a book the company that he represents uses. Looking more into the company it appears it is a Multi-Level Marketing (MLM) financial education and referral business.

The educator told my friends that at their age 67/58 and current 401k allocation that they should consider a 80/20 AA using a capital preservation strategy. The AA part is subjective the suggestion is sound.

What was surprising was that the educator mentioned they should invest in a capital preservation strategy that would 'guarantee' a minimum of 9% and a max of 12% ROI. The educator did not provide any details about the investment. That sounds like a growth type investment rather than capital preservation. Is there such an investment? I told my friends they need more details.

Yeah, you lost me at "guarantee." Likely no such thing - especially at ROIs like the proposed 9 to 12%, but YMMV.

 

[Al18]

Perhaps the 9%-12% guarantee is the financial educators commission! Some types of annuities are a much better deal for the annuity salesman and the annuity company, but not such a good deal for the purchaser. I would not trust such outrageous guarantees.

 

[DJRR]

Either a total scam or an "education" that does not understand that return of your own capital does not equal a return on investment.

 

[Dtail]

The only guarantees are that the returns will not be 9% and the advisor will be wealthier.

 

[pjigar]

My signature has the response! The funny thing with risk is that it is only apparent when you are in the middle of it. Chasing returns never end well, that I can guarantee.

 

[Exchme]

I feel sorry for your friends. Very few people can resist the temptation of this kind of bogus offering, they want so badly to believe it, that they fail to notice that it's too good to be true.

Please spend some time with them to coach them up on the realities of investing and five them some resources they can look into, but make sure they understand that trying to get rich quick with nonsense like this will leave them poor.

 

[jazz4cash]

We all share the same thought. Thank you all.

It’s good they have you as a friend! What do you think they will do. Are they buying this? Why are they sharing? What is the MLM if you don’t mind?

 

[HFWR]

Sounds like a Monty Python skit: Thou shalt be no less than 9%, but no more than 12%…

Why is there a max anyway?

 

[imjustawarrior]

Since the return of 9-12% return is guaranteed, I would ask about how the guarantee works.

9-12% real would be great. 9-12% nominal may or may not be great, but generally would be really nice.

 

[gauss]

A couple friend had their first ever meeting with a person to go over finances and investments. They met with a financial 'educator' not a 'financial advisor'. Apparently, this educator is not a CFP and only educates people about finances using a book the company that he represents uses. Looking more into the company it appears it is a Multi-Level Marketing (MLM) financial education and referral business.

aka pyramid scheme?

 

[Lorenzo]

aka pyramid scheme?

If people are paying to become "financial educators" and the money they pay goes into that "9-12%" payout to the existing financial educators, that would be a pyramid scheme. Seems unlikely they're doing something that brazen.

 

[COcheesehead]

Ask the “financial educator “ where his client’s yachts are.

 

[Aerides]

pants-on-fire

 

[silvor]

The "educator" is obviously a scammer. If anybody starts saying "9% guaranteed", it's time to walk out.

This is a classic annuity pitch. It is guaranteed 9%. But that includes a return of your principal. See what they did there?

 

[CalBird]

If someone figured out a capital preservation strategy with “guaranteed” 9-12% return, he must be super rich. Check if his name is in billionaire list.

 

[COcheesehead]

I am going to guess and say it’s some sort of annuity or insurance based product.

 

[Dtail]

If someone figured out a capital preservation strategy with “guaranteed” 9-12% return, he must be super rich. Check if his name is in billionaire list.

Of course if it was truly valid, they wouldn't tell anyone.