Brokers’ Advice Shunned, According to Poll

Brokers’ Advice Shunned, According to Survey

Nearly an astounding 83 percent of investors polled in a recent Weiss Ratings survey say that they are "unlikely" to rely on the investment advice of a broker.

“The results of this survey, at least in my mind, are the result of the major firms misleading clients and then lying about it,” says a Morgan Stanley broker. “The behavior of the firms has tarnished their image and soiled our image. The damage it has done is so severe that it’s going to take a while to recover.”

According to Weiss Ratings, an independent provider of ratings and analyses of financial services companies, mutual funds, and stocks, 1,622 people responded to the online survey in which investors were asked: "How likely are you to rely on the investment advice you receive from a stockbroker?"

Respondents were asked to vote for one of four choices: definitely unlikely, probably unlikely, somewhat unlikely and very unlikely. The results: definitely unlikely, 54.3 percent; probably unlikely, 28.6 percent; somewhat unlikely, 12 percent; very likely, 5.1 percent.

"The recent revelations about the brokerage industry's duplicitous practices have shattered investors' confidence," David Lackey, president of Weiss Ratings, said in a statement. "Investors are now waking up to the rampant conflicts of interest that exist on Wall Street, leading them to seek investment advice that is truly independent and unbiased."

Other recent polls, however, suggested that investors were not as adamant about relying on brokers’ advice. Even Lackey said in a phone interview, “I’ve read similar survey results in the press—I’m not sure which ones—and they were not quite as lopsided as the one we did. But I have not seen a survey to the contrary, where investors are relying more on their brokers.”

Lackey says the survey results show that “investors are jaded by the investment community, namely stockbrokers and research analysts, and investors are less likely to rely on the information provided by the established investment community.”

When told what the aforementioned Morgan Stanley rep said, a Merrill Lynch producer commented: “To a degree, I agree. Clients I’ve had for years won’t take my calls, let alone return them. Business is hurting—and hurting bad. Some of it has to do with the economy, and some has to do with the scrutiny the firms are under over the problems with research, analysts and investment banking practices.”

However, another Merrill rep says, “I’m sick of hearing [people and brokers] complain. Yes, the major firms screwed up. Yes, they lied about it. And yes, the dotcoms killed a lot of business because people are leery of investing now. Then came the terrorist attacks. But the firms are putting their houses in order and people still need to invest money. You just can’t sit there with your money in a bank getting one and half percent. There are ways to get five percent.

“I have no problems talking to people about investing, and I’m receiving feedback from those people—positive feedback. What brokers have to do is stop whining and dig in, get into the trenches and starting fighting back. There’s more than enough people are out there dying to put their money somewhere. It’s up to us to find them and win their business with our knowledge, experience and character.”

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