“Beware of false prophets, which come to you in sheep’s clothing, but inwardly they are ravening wolves.”
Victor Lustig sold the Eiffel Tower in 1925 for scrap metal. You read that correctly. Lustig invited a small group of scrap metal dealers to a secret meeting, where he identified himself as the Deputy Director General of the Ministère de Postes et Télégraphes. He convinced the group of dealers that the upkeep of the Eiffel Tower had become too much for Paris and the French government wished to sell it for scrap.
It would take a true sucker to fall for this con, and he found his man, Andre Poisson. Soon after the “sale” Lustig fled to Austria. Poisson was too embarrassed to ever report the crime, so Lustig decided to try and sell the Eiffel Tower again. Authorities caught wind of it this time and he had to flee to the United States.
Lustig traveled the U.S. with a device he called the “Rumanian money box”, which could allegedly print $100 bills. Lustig would tell people about the money box and they would beg to see it in action. After gaming the device for a demonstration he would have people insert bills and it would crank out copies. Of course, after viewing the demonstration people would offer him hoards of cash to buy the device and he would finally part ways with it to the highest bidder and skip town.
Just a few short years before Victor Lustig came to the U.S. there was another conman who was famous for guaranteeing 50% investment returns in only 45 days. His name was Charles Ponzi. The Boston Post even published an article endorsing Mr. Ponzi, and placed it right next to a bank ad that offered 5% annual interest. The crowds on School Street in Boston were lined up around the block every morning to hand over their money to Ponzi. We know how this story ends.
In 2018, we have become a little more aware. We know that we are not really the heir to the King of Nigeria’s unsettled estate, and that we shouldn’t wire over $10,000 to help get it settled.
Deception still exists though. Otherwise, why would a “financial planner” offer you a free steak dinner just to give you a free presentation on retirement planning? The proliferation of these seminars the last few years has been impressive. I’ve seen the ads and have been informed that the presentations usually harp on a few different buzz words like:
-“Capture upside of the market without downside”
-“A guaranteed income you can’t outlive”
-“What if a 2008 market crash happens again?”
The presenters play on your fears and push certain buttons that are likely to peak interest. Of course you want market upside without risk of loss, but that isn’t how the world works. If you believe it does, then I have a tower to sell you…….
Rather than getting pigeonholed into a product littered with conflicts of interest, you may want to gather more detail on what they’re offering and seek another opinion.
Consumers should seek a financial advisor that tells them what they need to hear, rather than what they’d like to hear.
Wall Street Journal columnist, Jason Zweig, once shared the following quote (which is one of my favorites) from his father:
“There are three ways to make a living:
1) Lie to people who want to be lied to, and you’ll get rich.
2) Tell the truth to those who want the truth, and you’ll make a living.
3) Tell the truth to those who want to be lied to, and you’ll go broke.”
There are some financial education events worth attending, but they usually do not include a dinner at a nice restaurant.
Retirement planning seminars would not take place unless the host that planned them was expecting a positive return on their investment, so it is important to remember there is no such thing as a free steak dinner.