Bill,
<<Most brokers UNDERPERFORM the alternative investment options, especially for small to medium investors (which afterall, is BOB's mass market.)>>
I was discussing mutual funds, and as we know, most of the them, load and no-load, do not beat the market.
<<Couple this with the breach of trust...brokers purposefully churn accounts solely to generate commissions, but unsuspecting victims often don't realize this.>>
Your comment leaves no room for even one successful or ethical broker, which is, I suppose, possible, but not probable. It might be more correct to say "SOME brokers purposefully churn...."
<<In comparison, everyone knows that a car salesman or real estate agent makes a commission. Sure, Bob could help listeners save money in many other ways...perhaps growing their own vegetables, or clipping grocery store coupons as well.>>
I would like to think everyone knows brokers make a commission, also. In contrast, I understand mutual funds must be sold by propectus which, in case an unethical broker did not disclose the load, would outline all fees and expenses. I don't know that car salesmen and RE brokers are required to make this kind of written disclosure. And from what I hear, it doesn't take much effort to file a complaint against a securities broker and cause him/her big problems. Thus, with the ever tightening regulations by the SEC and NASD, the bad apples have a good chance of getting hammered.
<<These ideas, however, don't make nearly as compelling radio as the shark-victim stories, wouldn't you say?>>
One might tend to agree, but if so, it is in my opinion because we have been conditioned to do so. Bob could make a big deal about exorbitant commissions on other product/service purchases. He could call these events shark attacks and even play some JAWS music. Unwarranted commissions is money we forfeit on whatever it is.
I have missed very few programs of MoneyTalk in the last 5 years and what I am becomming more aware of is that if a caller was sold an adjustable mortgage and Bob says he likes fixed, well the caller probably made a mistake and the mortgage broker could have offered better advice. But if the caller buys a loaded mutual fund then we're at the aquarium looking at the sharks while our hearts pound and Bob narrates.
The mistake with the mortgage could cost the caller as much or more than a load for a mutual fund. My tentative conclusion is that all of us (including Bob) do not like paying commissions for which we receive no value. But if a caller got a mortgage or a car that cost, in the long run, an extra 5% and the caller also bot a mutual fund with a 5% load, well, the mutual fund was a shark attack complete with Bob's speculation on how happy the shark must be and what the shark spent the money on, i.e., a new car or a fancy vacation, etc., while the mortgage or car purchase was simply a mistake.
The program is MoneyTalk not BrokerTalk and in my opinion all commissions for which callers did not receive quantifiable value should be eschewed equally. If they're all sharks then so be it. Money is money. Nevertheless, it's Bob's show and he can run it any way he wants to and I will continue to listen.
As ever, D |
