LPS5,
Most customers believe that the brokers are selling advice and access[.]
That's right - most customers believe that, and they're only slightly less naive than the majority of individuals -
those noncustomers - who, having read descriptionless, unqualified sentence fragments so often posted on
financial websites, opted to follow them.
People believe brokers are selling advice because brokers say, unequivocally, they are selling advice. Every broker I have ever talked to "sells" their ability to lead you into profitable investments because of their superior understanding of the markets, based on their experience, research, whatever. I've never had a broker try to sell me "a" stock. A stock transaction is merely an instrument by which they strive to prove to you the value of their SERVICE (I know you don't like that word, but that is exactly what every broker represents themselves to be- providers of financial services- including investment advice) and the vehicle by which are compensated for what they do. "Buy this stock. Let me prove to you that I know how to pick winners and make you money.. blah blah blah". Every one of them, without exception, has tried to sell me a "relationship" in which they will advise me where to put my money to realize my financial goals.
Look at the ads on TV from the big firms. What are they advertising? What are they selling? It ain't stocks, or bonds, or options, or futures. It is knowledge, expertise, advice.
That is the heart of the matter, and that is why Merrill and others have run afoul of the law. They sold advice that was deliberately misleading, selling out part of their constituency to reap a greater reward for the services they sold to another part of their constituency. We may all be naive fools, but even fools can be ripped off.
Dan |
