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- Thread starter CincyInterloper
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BuckStocksHere
Semper Fi!
I just logged in again for first time in forever and found this thread. I’m looking forward to reading the rest as I’m only on page 2.
To address this post, as someone in the arena - this isn’t accurate necessarily. I won’t say outright wrong but I will say more context is certainly needed.
1. Experience always helps, yet isn’t a panacea. Many times the junior advisors have much more time to handle calls/respond to issues, etc. If you have any assets at all, chances are you won’t be working with a junior advisor and if you do, he will be supervised by his boss.
2. MUCH more importantly - discretionary accounts, which is how we run 98% of our business, are handled behind the scenes. All of those accounts are traded with block trading when we make any adjustments in a portfolio. We can/do make adjustments either in between regular inv committee meetings or after meeting - no client contact needed.
3. Why? Because we have our clients in the proper risk tolerance. Everyone WANTS all the upside and no downside, but I’d like to own Augusta and have membership of 1. Not realistic. Focusing on downside vs upside showing real world returns in various market environments is a real eye opener when people see the possibility of their portfolio being down X% - X being a rather large number. Real world dollars declining hurts more to see it, rather than seeing -27% for example.
There’s soooo much more to add here but I’m limiting myself based on many complicated rules and regulations in our industry. I like my job, no need to jeopardize it.
4. I guess I’ll add there is NO one right way to run a business in this space. I still know of one old school “stockbroker” who is doing just fine. I know insurance only people, commission based folks, etc. I have my strong opinions but won‘t get into them here.
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@BuckStocksHere you happen to be speaking to someone who experienced it first hand. Brokers who began in the 1990s had never seen a market head south as fast as 2000-2002.. JD Uniphase went from $600 to $10 almost instantly.. and many other major tech stocks did the same.. from $72 to $2 in mere days... Lucent dropped 99%. Cisco dropped 90%. I didn't pick those.. my advisor did. Million dollar accounts went to $200K accts in a month.. while newer inexperienced brokers were focused on getting new clients.. took their eye off existing accts.. And if these accts were college fund accts, they were unrecoverable because college years don't wait for recovery.. which, in many case, never recovered. Folks getting into investing in a big way right now and using an advisor who hasn't lived it are at risk.
Stop losses.. sure.. experienced brokers know about them.. but not the new kids (and I don't mean trainees).. and new investors generally don't know about them either. Experienced brokers who have seen market volatility know.. They've lived it.. Investors who liked the new kid and decided to give him a chance - buyer beware. Managers overseeing what their advisors are doing? Did you really say that? I will give you 3 examples of the fallacy of that statement... Two Merrill's and one Stifel. The Merrill advisor (Tom Buck) was the largest advisor in all Merrill before going to prison. The Stifel fella (Chuck Roberts) has been hit with well over $200M in fines and lost cases and it's still growing. So where was this supervision you mention?
Block trading.. sure.. the mega accts get that attention... Like I said, the biggest accts are watched and treated differently.. Under $1M accts got hammered. I have zero doubt that Merrill had tons of ultra high net worth accts that had JDSU and I bet they magically got out minutes before the crash.
Risk tolerance in the proper levels?.. And to pose that like the client is the one who completely understands and directs that level is comical. If that were the case, there wouldn't be hundreds of thousands to millions of FINRA settlements about who really makes those decisions. It's why your profession calls it SALES
And BTW, I talk to literally a thousand financial advisors every month.. I review FINRA reports like you do stock research. I see real world.. and I lived it..
So I stand by every word and can back it up with facts and documentation. It's my livelihood.
Stop losses.. sure.. experienced brokers know about them.. but not the new kids (and I don't mean trainees).. and new investors generally don't know about them either. Experienced brokers who have seen market volatility know.. They've lived it.. Investors who liked the new kid and decided to give him a chance - buyer beware. Managers overseeing what their advisors are doing? Did you really say that? I will give you 3 examples of the fallacy of that statement... Two Merrill's and one Stifel. The Merrill advisor (Tom Buck) was the largest advisor in all Merrill before going to prison. The Stifel fella (Chuck Roberts) has been hit with well over $200M in fines and lost cases and it's still growing. So where was this supervision you mention?
Block trading.. sure.. the mega accts get that attention... Like I said, the biggest accts are watched and treated differently.. Under $1M accts got hammered. I have zero doubt that Merrill had tons of ultra high net worth accts that had JDSU and I bet they magically got out minutes before the crash.
Risk tolerance in the proper levels?.. And to pose that like the client is the one who completely understands and directs that level is comical. If that were the case, there wouldn't be hundreds of thousands to millions of FINRA settlements about who really makes those decisions. It's why your profession calls it SALES
And BTW, I talk to literally a thousand financial advisors every month.. I review FINRA reports like you do stock research. I see real world.. and I lived it..
So I stand by every word and can back it up with facts and documentation. It's my livelihood.
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BuckStocksHere
Semper Fi!
I won’t engage in a debate about this on a forum for obvious regulatory reasons about what is and isn’t advice from someone licensed. I will keep it very general.
What I will say is this: I speak on my company with the same facts you do. It is how we run a business. Yes there is supervision. We have many retired advisors so far and some as new as less than 2 years experience. We have no regulatory issues as is the case for the large majority of advisors in the industry. No different than most professions - most are good, there are always bad apples everywhere. I’d argue annuities gave the “industry” a bad name when they offered commissions at 10% and dirty brokers sold them for the wrong reasons.
Block trading entails ALL accounts. It’s why we have FULL DISCRETION on the large majority of accounts. All accounts over a very small amount ( think 5K) are all treated the same when it comes to this. If you are in our discretionary models, there is no difference in amount, only risk tolerance, which determines the holdings. If you are upset that “mega” accounts get more/different attention, it’s usually because they have a need for greater planning vs someone with just a Trad IRA for 200k. Different needs, wants. Everyone is treated based on their personal situation.
Stop losses aren’t for everyone and can cause harm as well. Like just about anything. See-dead cat bounce.
(Very simplified) - FINRA lawsuits are the same as ambulance chasers in many cases. Client doesn’t like the result, sues broker. Claims they didn’t know. Client meeting notes show they did in fact cover it. Arbitration panel finds for the advisor and hooray for us - it stays on our record for the entirety of our career. Win, lose or settlement. It’s comically bad. I can tell in the first 15 minutes of a meeting if you, as a prospective client, will be a pain in my ass. I will not hesitate to refuse to work with someone at this point in my career because I enjoy my job and value my time and my other clients’ time. Those guys you mentioned sound like real winners! Hope they enjoy their careers pounding rocks into gravel. I cannot and will not speak for another company’s supervision. I know the practice we run. You sound like you want to throw all of us out with the bath water. There is nothing anywhere that says you need to have an advisor.
It feels like your experience is on a big B/D level, not at the personal advisor level. I speak only for me and what I’ve experienced, seen, heard in this industry. It is also my livelihood.
To be clear - I am disgusted by piss poor/ unscrupulous advisors. They have no reason to be in this business. Much like a piss poor plumber, doctor, electrician, car salesman, barber, etc.
To get this off you and me: the discussions of social security/medicare and retirement I enjoyed reading. It is always interesting to read opinions of those outside of our client base and industry professionals. I’ve changed my tune over the decades from the “math” solution to the “real world” situation I would call it. Hearing and living through many many different situations has made me shift my opinion and likely what I will do as well soon. Never too old to learn they say and they were right.
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