The Secret Life of Stockbrokers
Stockbrokers are an interesting lot. Not because they’re renaissance men or women or otherwise unique in the world of suits and ties (I know this because I’ve know a few), but because they sometimes put forth an image that is, well, misleading. And thus, when they set out to live into that image, they are, in effect, leading a secret life.
The image is one of great status. Prestige. As if they are commingling with investment bankers and CEOs and perhaps skirting SEC investigations while laughing it off on the patio of the country club. As if they are removing tumors between trips to an antique car auction via private jet. But the truth is sobering when you strip the job down to it’s essence: stockbrokers are commissioned sales professionals. That’s it. An honorable profession for the most part, but really no different than the guy who sold you your last car.
One of the best shows on television is Men of a Certain Age, depicting the lives of three middle aged guys confronting their morbidity. One of them is the son of a successful car dealer who is, thanks to Dad’s early retirement, now running the business. From his point of view we see his crew of nattily-dressed salesman (doesn’t seem to be a female on the premises) driving cool cars they don’t own (demos), fighting for leads and walk-ins while professing product expertise worthy of a engineer. Truth is, it’s all just something they’ve read in the latest product bulletin.
Stockbrokers operate the same way.
Nolan Hoffman is the lead writer for onlinebanks.com and also blogs about his short sale experiences at debtkid.com.
They are not schooled financial advisors (that’s a completely different skill-set, usually requiring an M.B.A), and while they may have gleaned some experiential financial expertise along the way, any notions about a specific security or investment strategy come straight from the mouths of those M.B.A.s, who are sitting ivory, tall, distant buildings. The mere fact that the broker gets paid whether the value of your portfolio goes up, down or sideways attests to the fact that the focus is on landing the money, and that growing the money is merely a strategy to keep it in house.
At least the car dealer will fix your car or, if you write enough letter, replace it. Just for grins, suggest that you stockbroker refund your money next time the stock he picks for you tanks, just to see what happens.
The latest trend within the stock brokering trade is to place the client’s money into the hands of a professional in-house portfolio manager, after which the broker will have absolutely no input whatsoever other than executing your instructions to sell it off. Once they get your money in the door, they’re done. This is the very essence of the term broker, and worthy of all the contrived hubris of a ticket taker at the local Cineplex.
Of course, your neighbor the stockbroker – who may quickly correct you when you call him or her that, in favor of Financial Advisor or Wealth Consultant – will protest mightily. A quick glance at the Beamer in their driveway and the tan from their latest Mexican cruise will support this assertion, as it is intended to do. The work can be lucrative, as can many commissioned sales jobs.
But don’t be fooled. It’s all a secret, often leading to a secret life. The secret is, when it comes to contributing to the good of mankind and doing something special, it’s no different than the ambitions and material trappings of your other neighbor, the high school math teacher. Who is doing something special, by the way. If investment advice is what you’re after, what you hear there may be just as informed.