You turn on the radio and hear the same host week after week offering financial advice, chatting and answering questions posed by guests, and everything seems legit and trustworthy. But this is no ordinary radio show. What many listeners don’t understand is that the host has paid the station for the time slot, and the show is an advertisement created with the sole purpose of making sales and gathering clients. Even if listeners know the program amounts to an ad or infomercial, they may not be aware of the sketchy track records—personal bankruptcies, allegations of misleading clients and Ponzi schemes—accumulated by some of the radio hosts.
The Denver Post investigated several of the self-proclaimed experts hosting radio programs regularly on the AM dial in Colorado and nationally, and plenty of what was discovered is disturbing. First off, all of these shows must include a disclaimer that’s aired at the beginning of the program, and then again in the middle or the end. Even so, there are apparently a large number of listeners who are surprised to hear that what they hear is just an ad. Perhaps they tune in after the disclaimer, or they just tune that part out. But the show’s professional-sounding style and format, and the fact that the same voice is on the air in the same time slot week after week help give the impression that this is just another radio show.
In any event, the takeaway here is something you’ve heard before: Don’t believe everything you hear. To avoid getting ripped off, a healthy, borderline-paranoid dose of skepticism is essential for the modern consumer.
Now who are the hosts of these programs? Often, they’re local financial advisers and insurance salesmen on the hunt for clients. They pay for time on the radio as a means to drum up business. One host, Dean Barber, who runs a nationally syndicated program called “America’s Wealth Management Show,” has less-than-laudatory comments about his colleagues on the air:
“There really are some on the radio who people shouldn’t listen to,” said Barber, a resident of Kansas City, Kan. “A lot of shows out there are being done by people who . . . are simply insurance salesmen trying to make a case to come in and buy annuities. Some things they say are misleading.”
Interestingly enough, in the course of its investigation the Denver Post rounded up several allegations of misconduct against Barber, including a 2007 case in which a mediator ruled him liable for $168,000 to a couple who said Barber had sold them unsuitable financial products, and a current complaint of one client who is out $225,000 related to Barber’s advice. One of the advisers in Denver that Barber calls on as a guest on his show is currently a defendant in an SEC case alleging that he was part of a multi-million dollar Ponzi scheme.
Thus far, regulators have found it difficult to prove wrongdoing and get sketchy hosts off the air:
“It’s often very difficult since they are advertising pieces and they toe the line right to the very edge,” said Paula Sisneros, the insurance division’s director of compliance and investigations. “They’ll not cross it, and most times the broadcast is offering very little in the form of any concrete information.”
Goes without saying: You shouldn’t be handing money over to someone if you haven’t been given “concrete information,” and had the time to thorough review it. Unless you can prove otherwise, it’s best to consider financial products hawked over the radio in the same light as infomercial products—and as a recent Consumer Reports study made plain, most infomercial products are crap.