Scam alert for seniors: Beware the sales pitch

I have a pension that meets my current living expenses, so I keep my retirement savings in low-risk mutual funds. But a presenter at the senior center I attend is suggesting that I move this money to an index annuity. Would this be a wise move? -- A.K., Los Angeles, Calif.

I don't think you should invest in any financial product on the basis of a presentation given by an adviser at your senior citizens center or any other venue -- and that goes double for index annuities.

Why? Well, as my CNNMoney colleague Blake Ellis recently pointed out, educational presentations, free lunch seminars and the like that target seniors are often little more than thinly disguised sales spiels for dubious or even bogus financial products.

Older investors at the receiving end of such pitches -- whether through seminars, emails or phone solicitations -- can suffer serious financial setbacks.

A recent survey of 2,649 financial planners by the Certified Financial Planner Board of Standards estimated that seniors who are victims of financial abuse lose an average of $140,500 as a result of deceptive sales practices, bad advice and outright fraud.

And although all sorts of financial products may be touted during such faux informational sessions, index annuities tend to rank at the top of the list.

The reason is that these investments not only promise a small guaranteed return, but hold out the possibility of larger gains if the market performs well.

So it's hardly surprising that index annuities' tantalizing combination of safety and potential upside would be particularly enticing to older investors, especially when yields are so low on traditional safe havens like savings accounts and CDs.

Despite their appeal, however, index annuities come with some serious drawbacks. They can be mind-numbingly complicated, flaunt attractive bonuses that may turn out to be illusory, bristle with high expenses and, as if that's not enough, come with onerous surrender charges that can make them exceedingly expensive to get out of.

Obviously, you shouldn't enter into any investment lightly. But when it comes to vehicles that are hard to evaluate and prone to misrepresentation, index annuities are in a class all their own.

Which is no doubt why the Financial Industry Regulatory Authority (FINRA) issued an Investor Alert cautioning investors about index annuities when their sales began heating up two years ago.

If you're not confident about your own ability to invest your retirement savings, then it makes sense to get advice. But you want to be sure you get real advice from a real pro, not a marketing pitch from a glorified salesman whose credentials may be iffy at best.

You can do that by consulting with a certified financial planner experienced in working with retirees. Or you can pay an adviser on an hourly basis to evaluate your retirement portfolio and make suggestions that you can carry out on your own.

But if you overhaul your retirement investments based on a presentation given by someone whose primary goal may be selling you an index annuity, I'd say odds are pretty close to certain that a good chunk, if not all, of your nest egg is going to end up in an index annuity, whether it's a wise move or not.