“Keep Hands and Feet Behind the Yellow Line Until Your Retail Investing Representative Returns from the Restroom.”
The retail investing apparatus tilts like that tower in Pisa, with a roller coaster wrapped around.
We speak of market place products, pricing, and practices. It’s nice, the tower, but not square. The carnival coaster of retail investing can be nice, or stupifying, and still not exactly square. Simply breezing through the endless offerings quite often we encounter a subtle double message. We’re simultaneously vibrating to “You can do it,” and “But you need our special sauce.” For many people, for numerous reasons, that is true–not the special sauce, but rather assistance.
The stone fact is, the retail financial industry shakes a cape of complexity in our faces to dazzle, mesmerize, and prove their priestly worth. As wolves would withdraw from flame, we back away and it’s done. They are the “professionals, the experts,” definitely “deciders” concerning your money. You are now the “client.”
“Harsh,” you say? Really? I’ll show harsh: an up-front 5.75% load, $50.00 trades, fees you sometimes can’t find without help, 401k plans with zero options, and fees that, over time, take 65% of the gains–really. I can hear some pundit saying now “this may go on, but it’s not some systemic practice the industry should be concerned by.” Maybe, but the “client” should be.
Any investing tool/insight learned, is a win for us. Celebrate it, recognize it, add just one more.
Anyone who tells you the retail investing market isn’t full of carnival rides is ether lying, or clueless, or a clueless liar. The retail investing business is not designed for us. It’s designed to meet the broker’s goals, and presented as if to meet ours. It’s simply business as usual, only this time packaged investments and services are the products.
Brokerage firms are notorious for disingenuous practices, and much worse. They really don’t care if we do well, or become good knowledgeable investors. They want the business then, all done.
Obviously, great financial service is available, by people who, on a human level care. But then, if one doesn’t really know much, how could you recognize sound investing advice?
How can you recognize sound financial advice if you don’t know sound financial advice?
Would you get your wallet out here?
Many financial products are not designed to serve the investor well. Thus, unless one understands a constellation of critical concepts, when you pass the broker’s door, you are simply next. No? Go over fees with your representative. Start asking questions. The crisper your questions, the less cozy things become.
Come in, talk like it matters, tell us your retirement dreams, they flutter. They want you to feel cozy–they need you to feel cozy, and knowledgeable, and respected, and protected, and dependently unsure. That’s the business and you’re the target, oops, client. In this fuzzy sprawling hothouse of joy, fees are slippery, indelicate wee things, incapable of trouble or substance.
That fuzzy little hot house of broker joy grows sweaty as the questions get crisper.
Do these observations make sense? Yes, in part they do. I once questioned the first broker I ever worked with “Do you have any reading suggestions that could help my understanding?” Nothing remains to be said when a broker responds to this very question with “No. I don’t have any suggestions.” This broker’s plan popped into stark relief; “Remain ignorant, dependent, and in this case grateful, and keep ramming your investment cash my way.
In no way does my initial brokerage experience define the entire industry. I’ve been with my current broker for years and they are pretty great really. They are honestly helpful, consistently nice, and provide the entire range of services, incredible research tools and resources. They have done all that, and more, consistently for years, with super reasonable pricing, which includes good basic broad-market ETFs that trade free.
So there are good brokers and many other choices. Why point out the obvious? Investing is not a single purchase–Oh, I got a great deal, and it’s all done. Investment plans are open ended, going on for years. Thus we face “Compounding.” Over time those seemingly small fees “compound” into very big money, all of which is leaving your account.
Small money over time becomes bigger money. It’s yours or the broker’s. We will help make that money your money.
Images sourced from Pixabay.