THE RETIREMENT SCAMS

Hundreds of spruikers prey on the public's fear of retirement

This is a broad heading which, in reality, covers a multitude of scams, all aimed at retirees or those nearing retirement.

As outlined in Neil Jenman's upcoming book Stitched!, Australia has gone from being 'the lucky country' to being 'the frightened country'.

Today, millions of Australians fear for their financial future - especially those years of retirement when they are no longer in the work-force.

Hundreds of spruikers prey on the public's fear of retirement. They know that "fear sells" and that, by tapping into that fear, they can attract a worried public's attention. Once they have someone's attention, it's not long before they have that person's money and future in their slippery hands.

The retirement 'industry' is the feeding ground of property and finance spruikers. It is probably their main source of victims.

Any scam which preys on retirees (and those nearing retirement) has three simple but deadly steps.

First, the spruikers tap into the fear. This is most commonly done by using a fearfully dramatic headline, such as, 'Ninety per cent of Australians will retire poor'. The headline is then followed by a spruiker (either from a stage or in someone's lounge room) sprouting proven and terrifying facts - all allegedly supported by research from the ABS (Australian Bureau of Statistics).

While the facts may be true, it's the next stage of the scam that causes the damage.

Second, the spruikers offer a solution. Having presented the proven fear facts, the spruikers then offer what they claim is the proven solution. And this is where the best (meaning the best scammers which makes them the worst sort of people) spruikers are really impressive. This is where the lies and half-truths are sprouted as sure facts. This is where, despite years of repeating blatantly false and dreadfully distorted information, the spruikers have strode with impunity for years. No property or finance spruiker, for example, has ever been prosecuted for stating the common lie that "real estate has always doubled in value every seven years" or that "property is a better investment than shares" or that a finance product is "guaranteed" and is "just like a term deposit at a bank".

Let's be very clear about this - spruikers who target the retirement market are very slick, very convincing and very very dangerous.

It is no exaggeration to say that hundreds of thousands of Australians - ranging in age from their early 50s well into their 90s - have, between them, lost hundreds of millions of dollars since the Year 2000. This is probably a conservative estimate. The true losses would probably exceed a billion dollars.

Of all the scams, the retirement scams are the saddest because they affect people who, in most cases, find it impossible to recover. If someone in their 30's or 40's buys an over-priced investment property from a spruiker (as thousands do every year) then, in a few years, when they discover they have been scammed (or, at best, bought a sub prime property), they can work hard and earn some more money, invest safely and wisely and recover by the time they reach retirement.

But for those over 50, there is usually no second chance.

This is why, of all the scams, those that target the over 50s, are the scams that make Neil Jenman the most upset. "Spruikers who target the elderly are the most cowardly of all the spruikers," says Neil. "I don't like to use this word, but I can think of no better way to describe them than to say that these spruikers are the 'scum of the spruikers'".

When Neil Jenman exposes the scams that target the elderly he opens himself up to some of the most ferocious revenge attacks from the spruikers. Ripping off the elderly is, literally, a multi-million dollar business. It's growing constantly. As you read these words, someone, somewhere, is being ripped off in a retirement scam.

As mentioned, a retirement scam can cover a broad range of scams. The two biggest and most common ways that the elderly lose their money is through buying dud properties or through placing their life's savings with property companies that collapse. In the latter cases, retirees lose everything. They go from being comfortable to being paupers in an instant.

The most heartbreaking cries for help that Neil Jenman receives are from older people who have been ripped off because they fell for the retirement spiel.

Here is one recent example of an elderly couple who contacted Neil in 2008.

Back in 2002, this couple were in their mid-50s. They saw an advertisement about a free seminar on planning for their retirement. This was the hook. They called up and booked for the seminar. They had now taken the bait.

At the seminar they were "scared out of their wits" about their future.

But, then came the pitch from the spruikers. It was the typical 'we-have-the-solution' pitch. It sounded like the answer they needed to hear. Their future, their looming retirement years, they were assured, could be comfortable and prosperous.

The couple were nervous. Every effort was made to reassure them that they could trust the spruikers. They were given a video with one of Australia's most well-known agents predicting that property in prime locations in Sydney would double in five years. This agent was famous, so, surely, he would not mislead them.

And the spruiking company itself, well, they had been going for many years. They claimed to have helped thousands of others. Surely they could not make such claims if they were not true.

Putting aside their fears, ignoring their every instinct, the couple decided to trust the spruikers. They purchased two brand new apartments. Five years later, instead of doubling as the famous agent had assured them would happen, the properties had plunged in price.

The couple, who were now on the brink of retirement, could not afford the costs of holding the properties. They were forced to sell. They lost more than $300,000. The "opportunity loss" (the difference between what they should have earned with good advice and what they lost with bad advice) was almost a million dollars.

Yes, if they had ignored the spruikers and the famous agent, they could have virtually stuck a pin in the map and selected almost any other property (other than apartments in Sydney from these spruikers) and they would have retired comfortably.

But now, as they turned 60, they were financially decimated. The husband took a part-time job cleaning toilets.

It was at this point that they contacted Neil Jenman.

The spruiking company was still in business. Indeed, it was now spruiking harder than ever. Huge advertisements with another famous Australian as the front man. Credibility is critical for spruikers, especially when targeting the retirement market.

After a lengthy investigation, Neil contacted the spruikers. He met with the boss of the spruiking company who agreed to meet the investors.

After several weeks and much discussion, the boss of the spruiking company agreed to repay the investors their losses. Not all at once. He wanted time to pay.

Having believed they had lost everything, the investors, like starved refugees, were prepared to accept any financial crumbs.

As 2009 begins, this couple now has some hope for the future. From losing several hundred thousand dollars and having to take cleaning jobs to make ends meet, they are now being paid $3,000 a month by the spruiking company. It will take at least eight years for them to even recoup their capital loss.

But, without Neil Jenman's help, they would have had nothing.

Like many investors who have been stung by spruikers, this couple is very grateful to Neil and his team for his efforts on their behalf. "We honestly don't know how we would have coped if Neil had not got involved," they said.

There is, however, a nasty equation that Neil Jenman (and often his family) has to face. Helping investors to get their money back from spruikers might make the investors pleased with Neil, but it makes the spruikers furious. Many spruikers have vowed to do all they can to destroy Neil Jenman. The formula Neil faces is this: Helping investors equals risking harm from spruikers.

Hence one of the main reasons for this web site. To fight back against the smears of the spruikers.