Bill,
No doubt you are right. As I've said before, there are some great programs, like the Dolans and some stuff on CNBC and CNN, for people who want to become better educated in financial matters. I have no problem with people who want to do it themselves. If you are comfortable owning mutual funds, and have the desire to do it yourself, hey, more power to you. But this approach just isn't for everyone. For example, I have some M.D. clients who stay busy. These are guys who operate out of two or three offices, stay booked from 9-5 M-F, and take all the call they can get from the hospital. For them to make time to micro-manage their portfolio themselves would be counter-productive--they'd have to cut back on the call they took, and cut back on their patient billings. It's much more cost effective for them to have someone doing it for them, who is looking out for them on a full-time basis.
Are there crooked brokers out there? You bet! More than most people would care to acknowledge. I'm glad you brought up the parallels with HMO's and attorneys. I was served with a frivolous lawsuit for $9,000 (and no, it wasn't client or securities-related). I hired a law firm that I had never used before to defend the suit. Well, last week, I got a bill for over $11,000 from my lawyers. $11,000 billed on defending a $9,000 lawsuit--and we haven't even gone to court yet, not even depositions, just $11,000 for filing the initial response to the suit. It is pretty safe to say that I got screwed. What did I do about it? I hired another attorney to finish defending the suit and told him, up front, what I was comfortable spending (i.e., if its going to cost me $20,000 to go to trial, I'd rather just settle and pay the $9,000). Are all attorneys crooks, just because I ran into one who was? Absolutely not. Of course, I guess there are guys like Brinker who would say that I am stupid for not defending it myself. I guess I could, but I'd probably lose, since I would be lost in the legal system. And I guess I could spend hours in legal libraries trying to learn how, but that would take me away from my work--so that really isn't a good option either.
Sure there are flaws in the investment arena, just like there are flaws in the legal system. But there is fault on both sides. It never ceases to amaze me to watch people spend hours shopping for something as little as, say a dishwasher. They'll research Consumer Reports, and visit Circuit City, Best Buy and eight other stores, trying to pick the best $600 dishwasher and save a few bucks. But those same people who took hours and hours researching a $600 decision will turn around and buy some stock they've never heard of, from some broker they've never heard of, over a cold call. I've been a broker for eight years now, and have never had anyone ask me for references, a track record, or anything else about my background. To me, that's amazing. I think if clients did a little more research on their broker before picking one, there would be a lot less rogue brokers out there. What typically happens though, is they fall for whoever has the best sales pitch, and from what I have seen, the guys I've worked with who were the best salesmen were also, for the most part, the worst stockpickers.
Good luck! |
