A recent article in Investment Advisor magazine compared the National Football League (NFL) and the big brokerage firms. How are they similar? Well, it’s claimed that the NFL knew how much damage the players were sustaining during the game. The players thought they knew the risks they were taking, but the NFL was covering up the amount of brain damage the players were actually getting.
And the major brokerage firms?
The parallels here to the securities industry, at least to my mind, are pretty obvious. Instead of the employees being kept in the dark (although I suspect some of them are), it is the brokerage clients who don’t understand how the game is really played. Not only are financial markets and investment vehicles complex subjects (and in the case of some derivatives actually “rocket science”) that take years of education and experience to master, but study after study has shown that most investors are under the delusion that their brokers have a legal duty to act in their best interests.
Now, there are good people working for the “big box” brokers, I still have friends there. But unlike the days when investors were mostly sophisticated and wealthy, most investors today are middle-class and financially unsophisticated—and therefore in need of professionals who are on their side of the table, to help them manage their finances.
So what’s a typical investor to do? Here’s what the editor of Investment Advisor says:
The future of Wall Street is more clear (at least to me): Independent RIA firms that act as gatekeepers between their clients and financial product manufacturers.
We left the ‘big box” brokerage world behind to act as independent RIAs. We report to our clients, not to corporate headquarters. Our clients are the ones we have to keep happy, not the bean counters in New York. Welcome to our world, it’s a better one. Ready for a change? Call us at 757-638-5490 or toll-fee at 1-877-322-5490.
Arie J. Korving, a CERTIFIED FINANCIAL PLANNER™ professional, has been delivering customized wealth management solutions to his clients for more than three decades. Prior to co-founding Korving & Company, he was First Vice President with UBS Wealth Management and held management positions with General Electric.