Ray Lucia calls his investment strategy “Buckets of Money” on his nationally syndicated radio talk show. Federal regulators call it something else.
The Securities and Exchange Commission accused the San Diego radio personality of misleading investors to think that his strategy helps retirees “generate inflation-adjusted income for life.” They are seeking an order that would prevent the wealth manager from making such claims.
Lucia, whose radio program is broadcast daily in most of the nation’s top markets, promotes his fee-based investment program at seminars held at upscale resorts throughout the country. Some of those seminars are co-hosted by financial columnist and actor Ben Stein, who has called Lucia “the best wealth manager I know.”
Regulators accused Lucia of falsely claiming that his investment plan had been thoroughly tested and would help retirees safely generate income for decades, without jeopardizing a nest egg that could be left to their children. He advises listeners to divide retirement funds into three buckets: cash, safe investments and risky investments.
But the SEC said Lucia and his company, Raymond J. Lucia Cos., “performed scant, if any, actual back-testing of the Buckets of Money strategy.”
“Lucia and RJL left their seminar attendees with a false sense of comfort about the Buckets of Money strategy,” said Michele Wein Layne, director of the SEC’s Los Angeles office. “The so-called back-tests weren’t really back-tests and the strategy wasn’t proven as they claimed.”
Lucia did not immediately respond to a request for comment sent to his website.
His attorney, Michael F. Perlis, said his client did nothing wrong and expects to be vindicated. He noted that there are no allegations that investors lost money.
“I’m a big supporter of the SEC. Every once in a while the SEC goes off the tracks and it has this time,” he said. “And Mr. Lucia is going to fight.”
Lucia, who can be heard locally on San Diego station KOGO-AM 600, has become a fixture on national business television programs during the last few years. He’s often brought on to dish out advice to Americans saving for retirement, and has appeared on networks including Fox News and CNBC.
His seminars are free and used to find new clients who would be charged fees for his investment advice, the SEC said. During the seminars, Lucia is accused of showing misleading slides that indicate investors who set aside $1 million in 1973 would have generated $60,000 in income each year until 1994 while their nest egg grew to more than $1.5 million.
The investment scenario failed to account for advisory fees and included other faulty assumptions, the SEC said. When using historically accurate inflation rates, the 1973 investor would run out of money by 1989, according to the agency.
That is a far gloomier picture than Lucia presented in his 2007 book “Ready … Set … Retire!” in which he said his Buckets of Money system “has stood up to numerous back-tests representing some of the worst eras in past market history.”
The SEC said Lucia failed to maintain adequate records of his testing as required by federal law: “Lucia and RJL have admitted during the SEC’s investigation that the only testing they actually performed were some calculations that Lucia made in the late 1990s — copies of which no longer exist — and two two-page spreadsheets.”
The SEC’s order seeks financial penalties and “other remedial action” to be determined by an administrative judge.
Meanwhile, Lucia’s website is promoting a Sept. 22 seminar at the Hilton San Diego Resort & Spa, with guest host Stein, who once hosted the television show “Win Ben Stein’s Money.”
“Thousands of pre-retirees and retirees from all over the nation have attended this informative seminar and discovered how Ray’s Bucket Strategy can help them retire with confidence,” Lucia said on the website.