The NASD's New Commander

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Sep 21, 2006 6:30 am

http://www.nasd.com


Would like you ladies and gentlemen to check out Ms. Schapiro's speech with respect to retirees, soon to be retirees, and OUR (the financial services industry) obligation to them (retirees).


Baby boomers are starting to retire in droves. That presents both opportunities and challenges to us and the regulators. Good money managers and brokers/advisors can make a very nice living servicing these retirees without breaking any rules and give these retirees their money's worth with respect to advice and/or performance.


I think the key is "know thy client," here.


Ms. Schapiro is much more concerned with us doing the right thing for elderly clients than Robert Glauber was. She's very much aware that education (both for us and our clients) is important.


I consider this broker forum board to be educational. WE all can learn from each other and I hope the tone stays constructive going forward.

Sep 21, 2006 7:07 am

When do you sleep?


I think there is a unintended consequence of educating clients, and that is they feel more comfortable doing it on their own.


It really isn't rocket science at all and as the boomers retire more and more of them are going to use their time to manage their money by themselves--armed with subscriptions to the same research.


I realize that I am not the typical boomer in that I have the experience of having worked for thirty-five years in Wall Street--but I am not atypical when it comes to thinking like other soon to retire people.


Nothing concerns us more than maintaining what we have--and it's delusionary for a sales person to think that we do not notice, or care, that the sales person is siphoning off significant sums for doing next to nothing.


I've used the word "offensive" and "scam" to describe it--and I think it is.  I could place a seven figure portfolio with an advisor if I chose to do so--but I'm here to tell you that I will never do it because I see no reason why some kid who helped me get a squirel out of my house should suck $1,000 per month out of that account each and every month.


It's almost as if y'all don't have any appreciation for how hard it was to save that money, or what somebody who is retired thinks of $1,000.


In fact I know you don't because it was not until I got on the other side of the table that I truly began to appreciate it.


My wife and I used to spend money like water--that's because there was a never ending supply of it being deposited into our bank account.


While we still get nice deposits we have become far more aware of what things cost.  To us a 1% advisory fee would be the equivalent of spending a month on a cruise ship.


If you educate me that the market is efficient and that the best approach is to diversify through some well chosen mutual funds and then hold them though the business cycle why should I pay you more than once?


You like to consider yourself to be this well trained "professional" when we all know that you're not.  Many of you don't even have formal educations.  Most of you got the job because you were looking for a job--you drifted to the career.  It's been described as a "gig" on this very forum.


Lots of you failed Series 7 at least once, even more of you failed Series 66 at least once.  Your training was, "Here's your desk and your phone.  Please let us know if we can help."


I'm telling you, you can't fool the clients forever.  Six months ago I was a believer--but I'm not any longer.  Not because I don't appreciate the importance of advice--but because I know how the sausage is made.


As I look at the business from the other side of the table I am surprised that the SEC is allowing it, and even more surprised that somebody like Mike Wallace has not done an expose on Sixty Minutes.

Sep 21, 2006 7:24 am

I agree with "most" but not all of what you said. As far as educating clients, that's how I got the ones I have. Way back when I used to work for a living (60 hours plus per week) and had a Bear Stearns' stock jockey broker. He taught me a lot about stocks, bonds, trading, quite a few things.


I had quite a few friends who had worthless brokers (in their opinion). Thru the course of my "non Wall Street" career, sometimes we had chats about stocks and/or the market. From time to time I would tell those friends "we're buying XYZ and here's why" or "we're selling ABC, we made enough on it and there's no more upside for a while."


They began to realize that we (my old and long since retired BSC broker) and I were pretty good stock pickers. I began getting, "why don't you manage a little of our money" suggestions from those friends after they retired. I thought about it long and hard, and decided, "why not?" So far, everyone's happy and has no regrets.


Most retirees don't want to put in the time and effort it takes to 100% completely manage their own portfolios and that's why I think there will always be opportunities for good advisors/brokers and/or money managers to do it for them. If a client knows you are better than he/she at managing money and getting good returns, they don't mind giving you a little piece of the action. They would rather play golf or drool over 25 year old beach babes.


Sep 21, 2006 8:31 am
ymh_ymh_ymh:

Most retirees don't want to put in the time and
effort it takes to 100% completely manage their own portfolios and
that's why I think there will always be opportunities for good
advisors/brokers and/or money managers to do it for them. If a client
knows you are better than he/she at managing money and getting good
returns, they don't mind giving you a little piece of the action. They
would rather play golf or drool over 25 year old beach babes.





The current crop of affluent retirees are mostly recipients of defined
benefit pension plans--their money is being managed by others and they
really don't have a choice in it.



That is no longer true.  More and more retirees are being sent on
their way with lump sum distributions that they must make last for the
rest of their lives.  There is no pension check in the traditional
form.



Additionally, the pre-Boomer types are not at all comfortable with
computers and all that is available on the Internet.  It's not
that they'd rather be playing golf so much as they have no other
alternative but to play golf.  That is no longer true, in fact I
was reading something the other day talking about how golf is become
less and less popular and that part of that decline is that older
people are taking more of an interest in other things--including
handling their own financial matters.



It is not a good idea to think that the next twenty years will be
anything like the last twenty years.  The markets are LONG OVERDUE
or a significant correction and the investors are in charge of their
own portfolios.  As such they are significantly more likely to
pull the trigger and sell rather than risk their own money.



Those who are managing money for others have a completely different mindset than those who are managing it for themselves.



Everybody has been making money hand over fist for a quarter of a century, so even the amatures have had an easy time.



But those amatures are nervous as cats--and they're getting statements
that show the value of their accounts.  It's the height of folly
to conclude that some guy with $1 million in a 401(k) rollover is going
to smile and say I'll hold on, it will come back before I'm 100 years
old.

Sep 21, 2006 8:38 am

Agree on most of that but it's been my experience that retail sells at the bottom and buys near the top. Today's advisor/money manager has quite a few challenges ahead of him or her.


Anyone can look good, be a hero, make money in a bull market. A year ago, Brian Hunter was "hot stuff." Today he's probably in the market for a bodyguard or two.

Sep 21, 2006 9:21 am

"Nothing concerns us more than maintaining what we have"


is this written by the same person who yesterday argued,


"You are being paid to make my portfolio grow, not prevent it from falling."?


My retired/retiring clients usually have 2 goals.  1)Maintain their standard of living for the rest of their lives.  2)Leave as much money behind as possible.


Again, there is a big difference between managing money and financial advising.  I agree that many folks can manage their own money, but very few have the knowledge to act as their own financial advisor.

Sep 21, 2006 9:26 am
anonymous:

Again, there is a big difference between managing
money and financial advising.  I agree that many folks can manage
their own money, but very few have the knowledge to act as their own
financial advisor.





Nonsense.  The idea of "financial advisor" is no more than fifteen years old.

Sep 21, 2006 9:52 am

Mr. Putt NASD Wall St, so are you saying that managing money and financial advising is synonymous?

Sep 21, 2006 10:04 am
anonymous:

Mr. Putt NASD Wall St, so are you saying that managing money and financial advising is synonymous?





Not at all.  The term "Financial Advisor" is a relatively new term
to describe those who gather assets for fee based programs.



I know, I know--a financial advisor does far more than that. They
advise on who to hire as an attorney (based on what expertise?) 
They advise on who to hire as a CPA (based on what expertise?)

They advise on how to balance your checkbook, how to go grocery
shopping and how to select a pair of comfortable, yet affordable, shoes.



Oh, and don't forget advising on how to get squirels out of your attic.




Sep 21, 2006 10:17 am
anonymous:

Mr. Putt NASD Wall St, so are you saying that managing money and financial advising is synonymous?




Hey, anon, ook closely at Putzy and you'll see his STFU light is flashing  

Sep 21, 2006 10:19 am

"look"

Sep 21, 2006 10:22 am
Knows Wall St.:
ymh_ymh_ymh:

Most retirees don't want to put in the time and
effort it takes to 100% completely manage their own portfolios and
that's why I think there will always be opportunities for good
advisors/brokers and/or money managers to do it for them. If a client
knows you are better than he/she at managing money and getting good
returns, they don't mind giving you a little piece of the action. They
would rather play golf or drool over 25 year old beach babes.





The current crop of affluent retirees are mostly recipients of defined
benefit pension plans--their money is being managed by others and they
really don't have a choice in it.



That is no longer true.  More and more retirees are being sent on
their way with lump sum distributions that they must make last for the
rest of their lives.  There is no pension check in the traditional
form.



Additionally, the pre-Boomer types are not at all comfortable with
computers and all that is available on the Internet.  It's not
that they'd rather be playing golf so much as they have no other
alternative but to play golf.  That is no longer true, in fact I
was reading something the other day talking about how golf is become
less and less popular and that part of that decline is that older
people are taking more of an interest in other things--including
handling their own financial matters.



It is not a good idea to think that the next twenty years will be
anything like the last twenty years.  The markets are LONG OVERDUE
or a significant correction and the investors are in charge of their
own portfolios.  As such they are significantly more likely to
pull the trigger and sell rather than risk their own money.



Those who are managing money for others have a completely different mindset than those who are managing it for themselves.



Everybody has been making money hand over fist for a quarter of a century, so even the amatures have had an easy time.



But those amatures are nervous as cats--and they're getting statements
that show the value of their accounts.  It's the height of folly
to conclude that some guy with $1 million in a 401(k) rollover is going
to smile and say I'll hold on, it will come back before I'm 100 years
old.



"amature"......hmmmm....does that look right to you?

I think it's actually "amateur".

Sep 21, 2006 10:22 am
ymh_ymh_ymh:

Agree on most of that but it's been my experience that retail sells at the bottom and buys near the top.


When you say "retail" I assume you mean individual investor, and not retail as we term it. If I'm wrong, just what do you base your experience on? Have we yet determined what it is you do in this industry?

Sep 21, 2006 10:27 am
joedabrkr:


"amature"......hmmmm....does that look right to you?

I think it's actually "amateur".



More than his spelling and grammar errors what interests me is how he can endlessly pontificate about today's clients as if he knows anything about them or even how business today is conducted. <?:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" />


Every time he opens his yap I'm reminded of the drunk Finance Major lecturing the Infantry Captains at the O' Club about how to lead men in battle...


Sep 21, 2006 10:35 am
mikebutler222:
joedabrkr:


"amature"......hmmmm....does that look right to you?

I think it's actually "amateur".



More than his spelling and grammar errors what interests me is how he can endlessly pontificate about today's clients as if he knows anything about them or even how business today is conducted.


Every time he opens his yap I'm reminded of the drunk Finance Major lecturing the Infantry Captains at the O' Club about how to lead men in battle...




roger that!

Sep 21, 2006 10:37 am

"Retail" aka "individual investor" is what I meant.


FD: I wasn't the drunk finance major who gave the lecture at the Officers' Club.

Sep 21, 2006 10:37 am
joedabrkr:



"amature"......hmmmm....does that look right to you?

I think it's actually "amateur".





No it did not look right and I was about to change it when my wife
showed up to announce her schedule for the day and I just hit the send
button.



Even I make mistakes.

Sep 21, 2006 10:40 am
mikebutler222:

More than his spelling and grammar errors
what interests me is how he can endlessly pontificate about today's
clients as if he knows anything about them or even how business today
is conducted.

<>





What do you mean I don't know about today's client?  I am the epitome of today's client--the HNW Baby Boomer.



And I do know how the business is conducted which is why I am a critic of it.

Sep 21, 2006 10:41 am
ymh_ymh_ymh:

"Retail" aka "individual investor" is what I meant.


Gotcha. The usual use of the term "retail" is to describe those FCs that deal with the general public. Individual investors are just that, and I agree, they have an incredible talent for buying high and selling low.


ymh_ymh_ymh:

FD: I wasn't the drunk finance major who gave the lecture at the Officers' Club.




No, no, I wouldn't pin that on you....

Sep 21, 2006 10:43 am
Knows Wall St.:
mikebutler222:

More than his spelling and grammar errors what interests me is how he can endlessly pontificate about today's clients as if he knows anything about them or even how business today is conducted.


<>



What do you mean I don't know about today's client?  I am the epitome of today's client--the HNW Baby Boomer.


No, you're a gassbag that failed as an FC and still has a chip on his shoulder about it.


Knows Wall St.:



And I do know how the business is conducted which is why I am a critic of it.



Obviously you don't, and that's why you avoid every question concerning said business posed to you.


There goes your light again. Man, that sucker is bright....