Have you experienced the frustration of building up a sizeable retirement savings at an early age only to lose all or most of your nest egg by the time you need it most? Have you been lured into taking that nest egg and cashing it in, reinvesting that precious financial security in hopes of living comfortably for the rest of your life? If so, you are not alone: many hard-working, honest individuals have been misled into investing schemes that can cause these types of undesired results.
In a recent Investor Alert, employees of a major corporation had attended seminars where brokers pitched a strategy to investors encouraging them to take one or more of the following actions:
- Retire earlier than one might have planned
- Opt out of the company’s retirement plan (this usually required the employee to cash out their 401(k) plan or take a lump-sum payment for the cash value of their pension)
- Open traditional IRA’s at their broker’s firm
- Invest in variable annuities, Class B and C mutual fund shares, and exchange-traded fund shares, which are much more risky than the fixed benefit pension that they had just given up
These investment decisions were described in these seminars as capable of making aggressive annual returns as high as 18 percent. Of course, there was no mention of the risks that would be coupled with these aggressive growth scenarios. For example, the fact that the value of these investments would fluctuate with the changes in market conditions was never brought up. There was also insufficient warning that the overall return to investors would take a hit due to the various fees and expenses associated with the purchase and the related handling of the investment.
In addition to the misleading statements and the lack of disclosure regarding the associated risks, the investment scheme had excessive withdrawals attached to it. The initial recommended investment started from 7.5 percent to 9 percent and increased in five-year intervals. Yet some investors were led to believe that the rates would be continued for more than 30 years and have returns of 11 to 14 percent, which obviously was not the case. The reality, on the other hand, was that these rates and returns were unattainable. As a result, investors could not maintain the recommended withdrawal amounts and therefore most of the nest egg was lost.
If you have retired early based on misleading promises of a broker/brokerage firm in an investment scheme, The Law Office of Thomas C. Bradley is here to assist you. We are dedicated to recovering some or all of your investment losses. You need to know your rights so you can determine the best course of action. Please contact us today for a fee confidential review of your investments.