Should You Avoid Brokerage Firms?
Dr. William Bernstein (author of the “Intelligent Asset Allocator” and “The Four Pillars of Investing”) minces no words in describing the financial industry:
“You should avoid them, since their main goal is to transfer your wealth to them… To be avoided at all costs are any stockbroker or full-service brokerage firm; any newsletter; any adviser who purchases individual securities; any hedge fund. Most mutual fund companies spew more toxic waste into the investment environment than a third-world refinery. Most financial advisers can’t invest their way out of a paper bag.”
Very strong words, indeed. I agree with him. Brokerage firms are salesman with fancy titles. Their job is to “sell” you something…for a commission. Their goal is to transfer your wealth to them. How do you think Wall Street gets those big, beautiful buildings? Much like casinos, their buildings are built on your losses.
Brokers generally get you to break the basic rules of investing. They want you to Market-time, pick stocks, and rely on past performance. Why? Because these activities will generate their firms money, and lots of it.
- If they’re wrong in market movements, they’ll advise you to do something else with your money, which makes them money.
- If they pick the wrong stocks, they’ll sell you another batch with a different story, which makes them money.
- If they show you how well something did in the past it will make you think it will do well in the future, which makes them money. (FYI- past performance is no guarantee of future results).
So, what should you do if you don’t want your financial future dependent on the advice of someone that could have worked at a Verizon outlet store?
First, make sure you work with an independent Registered Investment Advisor (RIA).
Second, your discussion should revolve around the amount of risk that you’re comfortable with. You should always know the best case/worse case scenario for any recommendation!
Third, you should ask for the evidence-based, peer-reviewed data (proof). Academic studies that support your investment strategy are much better than relying on someone’s (brokers) opinions. These studies are unbiased and are not tied to a broker’s commission schedule.
So, here is the way to beat the Wall Street bullies at their own game:
Download The Investor Awareness Guide E-book at www.wealthabundance.com.
You’ll get information the brokerage community doesn’t want you know, teach you the “right” things about investing, and get you on the path to making your investing and retirement a success!