The brokerage industry seems incapable of looking out for their clients’ best interests. If it isn’t dumping the most recently issued IPO on investors, it is encouraging clients to go further into debt. According to the WSJ, some 15,000 financial advisors at Merrill have complained to management about a pay structure that encourages customers to take on more debt.
If your money is still at one of the big brokerage firms, isn’t it time you made a change to a financial advisor who will look out for you best interest? Boutique fee-only investment counsel firms are held to a fiduciary standard.
Lisa Beilfuss reports in the WSJ:
Adding to tension within the Merrill ranks: Some brokers say they feel pressure to push Bank of America products, such as checking accounts, to wealthy investor clients. Merrill is the brokerage arm of Bank of America.
Advisers can make up lost compensation by acquiring new clients and doing more for existing clients. The catch, some brokers say, is that growing portfolios by pushing clients to take on debt can be easier than finding new assets.
Loans that are backed by a client’s investment portfolio are a particular favorite of brokerage firms, said Jeffrey Harte, brokerage analyst at Sandler O’Neill + Partners. “It’s taking money that’s already there and making more money on it, versus the much harder job of going out and growing assets,” he added.
Read more here.
Jeremy Jones, CFA
Latest posts by Jeremy Jones, CFA (see all)
- Just Four Stocks Have Generated Half of the NASDAQ 100’s Gains in April - April 24, 2019
- Will Every Recession Now Demand Extraordinary Fed Intervention? - April 23, 2019
- IBM Plans to Make Great American Mainframes Again - April 22, 2019