by darnardo1 » Mon May 18, 2009 04:33 am
Are Broker-Dealers and Stockbrokers the same thing?
A broker-dealer is a company or other organization that trades securities for its own account or on behalf of its customers.
A broker-dealer is a company or other organization that trades securities for its own account or on behalf of its customers.
Posted: Tue May 19, 2009 11:38 am Post Subject:
Interesting turn on the thread thanks to both for the informative dialogue.
"Stockbrokers need to be an employee of a Broker/Dealer or they need to be an independent contractor of a broker/dealer."
Are Fininancial planners in the same boat? What is the difference with them? Is it the governance that is different? Hope you can clear up my confusion
Thanks
We have to be careful with terminology. Part of the problem is that "financial planner" is really a term without meaning. Anyone who is making money by selling securities must be affiliated with a broker/dealer. Therefore, if the "financial planner" is selling securities, they must be affiliated. On the other hand, if the financial planner is not selling securities, they don't have to be affiliated with a broker/dealer.
Posted: Tue May 19, 2009 11:49 am Post Subject:
Quote:
Most people who bought fixed indexed annuities and then needed their money within a few years, lost money, thus FIAs must be bad
Can you explain what you mean here?
It wasn't really a serious comment. Gary was using an example of a variable annuity losing money over the course of a year to paint VAs as a bad product.
I just pointed out that someone who needs their money after a short period of time would lose their money in a FIA. The reason that they would lose money is because of surrender charges.
Just like I don't think VAs are bad, I don't think that FIAs are bad. Like almost all financial products, they are either appropriate or inappropriate based upon the situation.
Posted: Tue May 19, 2009 11:59 am Post Subject:
Nope, the financial planner would plan out every financial details for you. They would devise the investments options, suggest you the coverage you need to carry in order to ensure the financial future of your family/dependants and so forth.
Stock brokers would restrict themselves with the dealing of stocks. They may also act on your behalf. However, they may make you suggestions about the best shares to buy but they normally wouldn't venture out to the other financial planning.
Hope that clarifies.
Thanks,
Rupert
Rupert, a stock broker is anybody who has their Series 7 and is affiliated with a broker/dealer. A typical stock broker not only does not restrict themselves to the dealing with stocks, for most stock brokers, selling individual stocks is something that they don't do very much. I'm not atypical for a stock broker. Well less than 1% of my income comes from the buying and selling of stocks.
Posted: Tue May 19, 2009 12:42 pm Post Subject:
I understand.
So they call themselves "Financial Advisors" which is a generic term. Financial Planner is also a generic term.
But they are actually commissioned salemen of mutual funds, stocks, bonds, variable annuities and other financial products. Nothing wrong with that EXCEPT they are STOCK BROKERS as that term is understood by Mom & Pops across the kitchen table.
You are correct that they are stock brokers (if they have their Series 7). They are certainly commissioned sales people.
However, I don't think that it is correct that they are looked upon as a STOCK BROKER as the term is understood by Mom & Pops. Look at Rupert's post. Most people think of a stock broker as someone who is trying to sell a stock. When you walk in on a meeting that Mom and Pops are having with their Smith Barney rep, Mom and Pops are going to say, "Let me introduce you to my financial advisor, George Jones." The reality will be that Mom and Pops may not own a single individual holding.
Correct. The statement posted above is "typical" of MOST ALL variable annuities. Variable Annuities VIOLATE the fundamental aspect of Safety of Principal inheirent in ALL annuities EXCEPT variable annuities.
That doesn't make them bad products. It simply makes them inappropriate products for people who have safety of principal as a primary concern. (Some VA's can give safety of principal.)
Homes and Annuities have nothing to do which each other. People lost money on homes over the past few years because they foolishly BORROWED double the money to pay for an overpriced house to begin with.
The homes didn't lose value, people paid too much and more than the house was ever worth to begin with.
I'm not trying to say that one has anything to do with the other. I'm trying to make the point that just because something can go up and down in value doesn't make it a bad thing. Borrowing money made their losses worse, but it didn't cause the loss. They would still have a loss even if they paid 100% cash. The value is what someone is willing to pay. If homes didn't lose value, stocks didn't lose value either. People just paid more than the stock was ever worth to begin with. That can't be a serious argument.
Annuity rhetoric.
You'd have to go out of your way to find any fixed annuity that doesn't have a 10% free withdrawal provision, waive surrender charges at death, waive surrender charges for nursing home confinment and waive surrender charges for terminal illness.
I have no anti-annuity bias. You are correct about what you are posting. However, people still lose money because things do occur that cause them to take money out early.
That's nice to know, great information.
Too bad their Stock Broker, Registered Representative, Financial Advisor, Insurance Agent, Financial Planner didn't protect his client's money BEFORE they lost 39% of their life savings.
Wait a second. First of all, if they didn't sell at that point, they haven't lost anything yet. Second of all, if the money wasn't invested in the variable annuity, it is possible that they wouldn't of had that money to lose in the first place. Finally, hindsite is twenty-twenty. Losing 39% in an investment isn't the same as losing 39% of one's life savings. If someone loses 39% off their life savings, the problem isn't in the investment vehicle. The problem is in having all of their life savings in a risky investment vehicle. A VA is an investment vehicle. The problem isn't in the vehicle, it is how the vehicle is used. A mustang convertible may be a fun car to drive on summer day, but I wouldn't strap my snow plow to it to clear 2 feet of snow from the driveway.
Posted: Tue May 19, 2009 03:18 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."
Posted: Tue May 19, 2009 03:34 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."
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.
Posted: 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.
Posted: Thu May 21, 2009 01:20 am Post Subject:
Thanks, Gary. Good arguments done in a civil manner can be learning experiences for posters and readers alike.
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.
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.
Posted: Thu May 21, 2009 09:18 am Post Subject:
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.
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]
Posted: Fri Jun 05, 2009 01:12 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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