Brokers are applauding CBS for refusing to air a 30-second TV commercial from Charles Schwab that depicts full-service brokerage house reps as dishonest and corrupt.
In the ad, a broker says: “OK, kids, here's today’s magic stock. We’ve got big incentives on this one, so get on the phones. We got a lot of stock to move. Tell your customers it’s red hot. This one is en fuego. Just don’t mention the fundamentals. They stink. There are a couple of courtside playoff tickets for today’s winner. Let's put some lipstick on this pig. Get to work, people.” Then a voice-over says, “There’s never been a better time for Charles Schwab … [There are] “no incentives to push stocks, so the advice you get is in your best interest.”
Schwab says it wants to show that there is “a problem in the industry,” and that it is “an alternative” to wire houses such as, Merrill Lynch, Morgan Stanley, Salomon Smith Barney and Prudential Securities, all of whom are presumably riddled by conflicting interests.
But CBS said the Schwab commercial “impugns the motives of anyone who works for a brokerage house that charges a commission. We screened it, and we judge this to be misleading and disparaging.”
While CBS refrained from airing the spot, other networks and cable channels have been showing it. NBC aired the commercial during the NBA Finals.
Merrill producers that Registered Rep. contacted were outraged.
“It’s totally unprofessional,” says one Merrill rep, for Schwab to attempt to “capitalize” on Merrill Lynch’s $100 million fine.
“I applaud CBS for not showing the ad,” says a Prudential Securities producer. “It’s a deceptive ad.”
Says a Morgan Stanley broker: “CBS showed a tremendous amount of class by not airing the ad, and I’m surprised in a way that they didn’t show it. [Depicting all brokers as unsavory] is nothing new.”
The rep points out an online discount ad that showed “a schlep” in a wrinkled suit leaving a slummy apartment, dragging himself into a packed subway to go to work, then crawling into his little cubical office and starting to cold call?
“Then the commercial went on to say something like, “Is this the kind of person you want working for you?” the rep says. “It was appalling.
“[Brokers] have been slammed around for a long time. This is nothing new. It’s definitely deceptive, and it’s definitely a situation where Schwab is trying to muscle in to grab clients.”