Stockbrokers and Broker Dealers

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PostPosted: Tue May 19, 2009 3:18 pm   Post subject:   

Right on Gary! Fact's speak volumes over rhetoric. I was once accepted at Ameriprise and they were bragging about: "as a financial planner if client's stay on the books we charge em' portfolio fee's annually and split that with you...even if they lose money."


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PostPosted: Tue May 19, 2009 3:34 pm   Post subject:   

Quote:
Right on Gary! Fact's speak volumes over rhetoric. I was once accepted at Ameriprise and they were bragging about: "as a financial planner if client's stay on the books we charge em' portfolio fee's annually and split that with you...even if they lose money."




What's interesting about this quote is that it has nothing to do with being a stock broker or a registered rep. In one's capacity as a registered rep, they can't charge fees. A registered rep gets paid to sell financial products. If fees are being charged, one must be a representative of a Registered Investment Advisor (RIA). This takes a series 65 or 66. One who only has a 65 or 66 can't sell financial products. One who only has a series 6 or a series 7 can't charge fees.



When one is charging a fee for investment advice, it makes sense to charge regardless of whether the portfolio makes or loses money. Otherwise, the advisor would be in a position that it would only make sense to invest very aggressively or very conservatively. Anything else doesn't make sense for the advisor which leads to huge conflicts of interest.
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PostPosted: Wed May 20, 2009 11:50 am   Post subject:   

Lots of good information on this thread and Insurance Expert has done a great job telling the "other" side of the financial services story.



Unless you own a business or are a private investor there really is only three (3) places to put your money.



#1) a bank;



#2) an investment firm;



#3) and insurance company.



When investing/saving money one must understand predominately what area of the financial services industry their "financial advisor" is rendering advice.



Is he/she a BANKER? a STOCK BROKER? an INSURANCE AGENT?



The type of financial products and advice a person gets from the above three sectors is going to be totally different. All three are competing for your investment and savings dollars.



Citigroup is the brain dead and BROKE organization who pushed for the development of the "Universal Banking Business Model"



In less than 10 years since the passage of the Financial Services Modernization Act of 1999 this failed business model almost collapsed the USA monetary system.



You simply can't have the advisor at the bank who lends money be the same person who advises the same person how they could "invest" their home equity loan proceeds in the stock market.



A big part of the collapse of the stock market, housing market and the banks is because they repeated the EXACT same thing that caused the stock market to crash in 1929.



You simply can't use BORROWED money as the source of funds for investing in stocks and mutual funds.



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PostPosted: Thu May 21, 2009 1:20 am   Post subject:   

Thanks, Gary. Good arguments done in a civil manner can be learning experiences for posters and readers alike.



Quote:
When investing/saving money one must understand predominately what area of the financial services industry their "financial advisor" is rendering advice.



Is he/she a BANKER? a STOCK BROKER? an INSURANCE AGENT?




What do most bankers, stock brokers and insurance agents have in common? They are usually registered reps. Bankers and insurance agents usually are. Stock Brokers are always registered reps. Additionally, most stock brokers and most bankers are insurance agents. In short, it is hard to make much of a distinction because the majority of people are both registered reps and insurance agents.



That being said, the people who work at the traditional wirehouses tend to do a terrible job at insurance with very few exeptions.



Quote:
When investing/saving money one must understand predominately what area of the financial services industry their "financial advisor" is rendering advice.



Is he/she a BANKER? a STOCK BROKER? an INSURANCE AGENT?




There is something very important missing here. If they are getting paid to render advice instead of being compensated to sell a product, they are doing that work as none of the above. Getting paid to give advice is a rapidly growing segment of financial services. Anyone who is charging fees to put together financial plans is doing this as is anyone handling investments for a fee based upon assets under management (AUM). A stockbroker, for example, is not able to charge a fee for AUM.
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PostPosted: Thu May 21, 2009 9:18 am   Post subject:   

Quote:
In less than 10 years since the passage of the Financial Services Modernization Act of 1999 this failed business model almost collapsed the USA monetary system.






Basel II (Revision of the Basel Accord, 1998) created procedures through which regulators ensure that each bank has sound internal processes in place to assess the adequacy of its capital and set targets for capital that are commensurate with the bank's specific risk profile and control environment. - Financial Institutions Management, Anthony Saunders & M Cornett, 2008



I believe the stock crash of 2008 has more to do with mispricing the value of default deritive swaps (an kind of reinsurance). In short, because everyone insured everyone...no one was insured. There are ratios a bank must keep with when supplying itself with its own business.



Quote:
A big part of the collapse of the stock market, housing market and the banks is because they repeated the EXACT same thing that caused the stock market to crash in 1929.




As I am aware the crash on 1929 had more to do with protectionism (closing the market by setting trade barriers).



Just my thoughts on the issue...[/quote]
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PostPosted: Fri Jun 05, 2009 1:12 am   Post subject: broker commission  

Do Brokers recieve recurring commission on policy sales? or do the recieve a 1 time commission?



Also Brokers do not recieve overriding commisions correct?

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PostPosted: Sat Jun 06, 2009 3:05 am   Post subject:   

Denardo, your question appears to be in the wrong thread.



Brokers receive recurring commissions when the product that is sold pays a recurring commission. Some do. Some don't.



Some brokers receive an override. Some don't. The more successful the broker, the more likely they are to receive an override.

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PostPosted: Mon Jun 08, 2009 12:40 am   Post subject:   

All this "some do some don't" that I am hearing makes it difficult to make charts and clearly outline the differences between the channels >.<



Thanks for your help Insurance Expert

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