Free Food, Expensive Indigestion

“Where are y’all going to eat?” asked TJ (name changed to protect the innocent), my boss. He was addressing a group of us young brokers as we were headed out the door around noon. “The Lodge,” one of us replied.

My co-workers and I were mostly twenty something males that, for the most part, had never outgrown the frat house culture of college. “The Lodge” was a “club” that was close to our office that offered a “free” lunch buffet on Wednesdays. TJ, being about 10 years older than us, was somewhat of a big brother figure that frequently offered advice that he had primarily acquired knowledge of the hard way.

“Want to join us?” one of us asked. “Sure, I’ll drive,” he said, “but first we need to hit the ATM."

"But, it's free!" someone said.

“There ain’t no such thing as a free lunch,” replied TJ.

Whether it’s a free buffet at a casino, parasailing at a timeshare resort or a meal at an “educational seminar” put on by an insurance salesman, the end result is almost certainly that someone there is going to pay. If you find yourself in one of these situations thinking you somehow owe it to the lunch provider to reciprocate or make a hasty decision, it will serve you well to remember TJ’s advice to us young knuckleheads.

Even FINRA has gotten into the act of warning investors to beware of the “free meal” seminar. They found in a 2007 study that, “In half the cases, the sales materials—including the invitations and advertisements for the events—contained claims that appeared to be exaggerated, misleading or otherwise unwarranted. And 13 percent of the seminars appeared to involve fraud, ranging from unfounded projections of returns to sales of fictitious products.”[i]

Any of the aforementioned scenarios are pretty easy to spot and if you go in with the understanding that they are trying to sell you something, you can avoid making expensive mistakes. But what if the scenario isn’t so evident?

Investment firms, in addition to offering free lunch seminars, also offer “free” meals in much more subtle ways. There are a myriad of schemes that unethical or uninformed advisors use to market themselves. The one thing they have in common, is that they offer something (higher returns) for nothing (lower risk).

Even some of my colleagues in the “Evidence Based” advisor world sometimes make the mistake of suggesting that investing in value or small company stocks somehow provides higher returns than the market overall with less risk. In fact, significant periods of time can go by where any particular factor such as size or valuation under or over performs.

The key is to match your tolerance for risk with the right allocation to asset classes and factors within those asset classes. Then maintain the discipline necessary to stick with the strategy during the worst times.

It is said that the stock market climbs a wall of worry, but if those concerns keep you up at night you are probably taking too much risk with your portfolio. At ATX Advisors, we believe that understanding a client’s risk profile involves determining how much risk is required to achieve their goals, how much capacity they have for risk, and finally what their tolerance for risk may be. After that, we check in frequently and test to insure that not only was the initial assessment accurate, but if anything has changed over time. If you would like to take a risk tolerance test for yourself, schedule a “Get Acquainted” conversation at


Something for nothing sounds great, especially when food is involved. I haven’t had much success finding “free lunch", but there are some great lunch deals out there. One of my favorites is the Thursday & Saturday Special at Sandy’s Hamburgers on Barton Springs Rd. $4.59 + tax for a ¼ lb. hamburger, fries, and medium Coke®.

What’s your favorite ATX lunch deal? Let me know on Twitter @atxadvisor.