Anybody else tired of the "Blame Wall Street" news

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Aug 31, 2009 4:36 pm

I'm really getting sick of the media and government officials blaming Wall Street and the investment world for everything.  Here is an article that really ticked me off:

 
http://www.financial-planning.com/news/schapiro-warns-broker-dealers-aggressive-recruiting-2663745-1.html?ET=financialplanning:e683:1878895a:&st=email
 
What the hell does recruiting have to do with anything?
Aug 31, 2009 4:54 pm

She's actually got a bit of a point.  Several years ago I talked with an FA from another company who wanted me to join his team.  He said his company had a program for me that would be 100% of T12 in a forgivable loan for 6 years, 50% of T12 if my assets were 75% or better of my AUM when I transferred, and another 50% of my T12 if my production was a something like 75% of T12 after 12 months.  All told it would have added up to about $360K if I would have hit their marks. 

 
Now, the first two weren't production oriented, but that third one was.  So if I was at month 10 and I knew I was behind, don't you think I'd be doing whatever I could to hit the gross that I needed to get that extra money? 
 
I think that's her point.  Advisors are going to do what they need to do to hit their bogeys.  So, they're warning the firms not to put the big pie in the sky bonuses out there that would create those conflicts.
Aug 31, 2009 5:43 pm

What else is new?  We, we being financial advisors, weren't part of the problem that caused the market meltdown. But you can bet your ass we're gonna be part of the solution! Why, because the government can't fix the problem that caused the meltdown. Nor can they stop the Bernie Madoffs of the world from ripping people off. Butttt, can they put their 1000 pound gorilla thumb down on some lowly financial advisors? Yup! And, can they use it to convince the investing public that they're working hard to protect them? Yup!  And the public will buy it.

 
This is nothing new. Years ago the NASD and the SEC declared rogue brokers to be the root of all evil. These bastards were ripping grandma off and moving from firm to firm before the inept arm of the law could catch up with them. Thus the SEC tapped broker hater,  Merrill Lynch Chief Dan Tully to investigate the problem. Tully formed a commission, and created a rogue broker definition, X number of complaints, and X number of firm changes equals a rogue broker. As hard as they looked, the commission found less than 300 rogue brokers, by its own definition, out of over 90,000 registered reps. Hmmm, sounds like a non problem? And of course it was a non problem. People weren't losing money because of rogue brokers, they losing money because of failed banksand real estate plumeting, all with DC's blessing. However, a government steamroller never lets an unexpected result stop it from its appointed mission- to run over all in its path. Tully announced two major fixes to the non problem- first, all advisors would be required to undergo continuing education. Apparently, had the rogue brokers had Continuing Education they would have learned that it is against the law to engage in theft of funds from clients accounts, trade in ficticious names, kite checks, and do all the other things that make them, well, rogues! The second recommendation of the Tully commission was that firms should adopt a fee platform and abandon a commission structure, in that commissions create a conflict of interest between the advisor and the client. Coincidentally, Merril Lynch, again the company that Tully headed, was trying to move to a fee platform to iron out and stabilize its roller coaster earnings. So, there you have it problem solved in the best interest of the public.
 
Don't expect it to be any different this time. Already, in response to Madoff, rules are being proposed that will require all mutual funds sales be preceded by a prospectus and a waiting period. The waiting period is proposed to give the customer time to read the prospectus. That mutual funds weren't involved in the Madoff mess doesn' matter. Your government has to protect you and some rules are better than no rules.
 
Lastly, doing gross soley to hit a number? Totally uninformed! That's short term stupid. And no doubt, just as there are rogue brokers who rip people off there are advisors who would short their clients to meet a payout goal, most wouldn't and don't.
Sep 1, 2009 1:09 am

I worry that the younger generation of financial advisors may never see the same financial rewards as the guys FA's in the past.  Obama's socialist views will take from our pockets and give to others.  Being in this industry we are easy targets right now.  If that guys would have spent one year in the private sector I think it would open his eyes to what America is all about.  This is what happens when a "rock star" gets voted in after being a community leader and part time Senator.  Can't wait til the mid term elections. 

Sep 1, 2009 9:01 am

Remember it's only 4 years, maybe 8 but still.. If history has proven anything, it is that any 4-8 year presidency can be completely reversed by the next guy.. the beauty of a republic... um I mean democracy

Sep 1, 2009 8:10 pm

With all do respect for the fact that everyone on this board hates Obama, Obama is not the issue or the problem here. The biggest regulatory changes in my 26 year career took place under a republican president. The regulatory environment  as it pertains to us is A political. Or however you say it. And i'll debate that point with all comers.

 


 Pontificating about reigning in Wall Street makes good head lines. it's feel good stuff. people are mad as hell at Wall Street. That they aren't mad at their government shows how good the spin has been. Because their government's fingerprints are all over this mess.
 








Sep 2, 2009 10:17 am

The last round of this was right smack in the middle of Bush's presidency.  All the revenue sharing, short trading, etc was at the end of the last bear market when people were pissed and looking for someone to take out there anger on.  You mix people, money, government, and a bad market all together and you're just asking for lawsuits and extra special regulation suggestions. 

Sep 2, 2009 3:47 pm

People talk about our fees/commisions but they never complain about the commisions a insurance rep makes, most insurance products pay over 8% most being higher.

 
To be clear I talking about insurance other than annuities.
Sep 2, 2009 4:24 pm

Reading Schapiro's words they are exactly the uninformed diatribe we've come to expect from our far from best and brightest bureaucrats. Don't let the facts get in the way of solving a non-problem

 


As I said, these people can't do anything to stop the type of fraud that toppled the markets. Nor can they stop the Madoffs from stealing everyone's money. Why? Simply, they aren't smart enough.
 
Government doesn't have to be smart. One need only look at NJ for proof of that, but i digress. But government does need to take action. Pounding the table to stop the bonuses of the very people who crashed the market, financial advisors, well there ought to be a law!!!! And sooner, rather than later there will be. Again, the facts don't matter. Gov can't fix the problem but they can act as if they are doing something. Just like continuing ed stopped rogue broker fraud.
 
Suppose you were an idiot. And suppose you were a member of congress. But I repeat myself.
Mark Twain
Sep 2, 2009 4:25 pm
Greenbacks:

People talk about our fees/commisions but they never complain about the commisions a insurance rep makes, most insurance products pay over 8% most being higher.

 
To be clear I talking about insurance other than annuities.
 
The difference is though, for the most part, the client is not paying a separate fee for the insurance.  If a client has a 30 year term policy that costs 1K a year, the insurance company is coming out of pocket to pay the rep, not the client.  After the commissions are paid, the client has the same premium.