Ex-broker: “most of what I did was bad for clients”

This clip is a must watch for everyone using an investment “advisor” to manage their savings. One of the most complex questions that must be confronted is why so many intelligent, hard working people continue to place their trust, hope and capital in the hands of sell-side firms even after they have suffered through cycles of repeated loss.

Hard as it is to accept, I have come to realize that many people do not wish to see the truth. Many prefer to rationalize that they have suffered from one bad apple rather than a whole orchard that is rotten. It is irrational to move on to a new investment firm with the same approach and philosophy as the last and look for different results. Whether the motivation be desperation, naivete or willful blindness, financial suicide is a sad thing to witness.

“Many of those who work on Wall Street go through a process in which they gradually learn that what is perceived as “smart investing” is often unbelievably dumb.

Specifically, they learn that many of the recommendations that Wall Street makes–and the transactions that Wall Street gets paid to facilitate–are not in their clients’ best interests.

And once they learn that, they face a choice:

Continue to make the same bad recommendations and trades.

Or change the way they do business, often in exchange for a lower initial salary.

Here is a direct link.

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10 Responses to Ex-broker: “most of what I did was bad for clients”

  1. michael says:

    Starting when he did it wasn’t too hard to make the leap from the sell side. I wonder if he would have had we not entered the secular bear. Well I actually don’t wonder. Have no idea what he is doing for his clients and how much he is skimming in the process but I bet it may be more than he would be making on the sell side. Still has that smartass swagger coupled with the nuckle dragging dialect of the Bowery. Just an act?

    I agree with you “many people do not with to see the truth”…..however I would say most people.

  2. michael says:

    PS: How bright can a person who consistently uses the word “retard” as a mainstay of his schtick really be? Just wondering.

  3. michael says:

    If there ever was any question as to which side of Wall Street this entertainers Berluti’s rest this should make it all pretty clear.


  4. michael says:

    Now for some intelligent thoughts on the Occupy Movement. Why does brilliance keep getting kicked to the gutter? …….”many people do not wish to see the truth”


  5. Robert C says:

    So true how some advisors are not in it for their clients. When I was faced with a company downsize I met with an independent financial planner who did not sell any product, her advice was a self directed portfolio in conservative investments. My bank on the other hand wanted me to go with their mutual funds management advisor or turn it over to an investment analyst. I went the route of self directed. best decision I made, I learned a lot and have done very well in these troubled times.

    My parents had a good planner with a different bank who gave advice but always let my parents make their own decisions. The bank moved that person out and moved in another person. This new person has no interest in my parents investment goals and plans, when they meet the new planner she already has a list of where their funds should be invested and battles and argues with my parents that this is where their money should go. She has no interest in listening to their plans. My Mom shows me some of the funds and they are far too conservative or far too risky compared to the ones they are currently in. If they went with that they would have lost in the last year instead of conserving their capital they had. Yet this advisor keeps pushing and at one time tried delaying the paper work trying to get her way.

  6. John says:

    Within the past couple of months I had two conversations with two different “Wall Street” insiders. One was a broker at Dean Witter in the World Trade Center back in the ’90’s before DW merged with Morgan Stanley (this guy now sells cars; says being a broker bored him). The other is a retired, elderly gentleman who worked on Bay Street (I forget if he was a broker or investment banker). Anyway, both of them told me quite bluntly how the game is rigged to basically fleece investors. The younger former Dean Witter broker, whose clientele were mostly from the tony parts of New York City and Upstate New York and Connecticut, said, “In the end, they all lose.” What he meant was, in the end, greed gets everyone. The retired gentleman became disillusioned with how corrupt the business was becoming and decided to cash out. Both of them freely admitted they made lots of money during their time in the business, but both seemed to feel just a bit guilty about it.

    Danielle, as you explain in your excellent book, “Wall Street” is not about investing, it’s about selling. My rule of thumb is: never buy anything someone is trying to sell to you, unless you wanted it first. If the primary function of “Wall Street” is to sell investments rather than manage investments, then by definition, what they are offering will benefit them, not you.

    Today, the Wall Street “sales force” is more active then ever. Every major media outlet and specifically the financial media are constantly spewing stock quotes, earnings reports, IPOs, M&As. It’s like the 1990’s again. Only this time, it seems the little guy is tuning out. In order to get him back “in the game”, the powers that be will have to ramp these thin markets ever higher with the help of HAL 9000.

    Whenever BNN feels confident enough to being airing those spots depicting regular “little guy” investors explaining how once you overcome your fear of risk you will be rewarded with markets that climb higher and higher and… that’s when you know it’s nearing the time to get out.

  7. Roberta says:

    I only need another $950K and my favorite investment advisor will be ready to work with me. 🙂


    Danielle, WHAT do you suggest people invest in now? I’ve been in cash since the 2008 collapse so I have made zero money in the past 4 years. Prices of goods are rising, particularly food, so those saved dollars are shrinking. Can’t buy a good used car now since everyone is driving those until the wheels fall off, and the few available are bought up by dealers who put rip-off prices on them.

    Can’t continue on this path forever. Retirement age is approaching some day……..

  8. redleg says:

    I’m in the same boat as Roberta.
    I don’t see an alternative to using the leeches that call themselves “financial advisers” given my family’s available assets. We only have enough to get fleeced, as better advice costs more money and we don’t have enough to make it worth the effort on the part of the “advisers”. My wife doesn’t see the economy as ripe for collapse as I do, but we both know that we are being taken to the cleaners by our current adviser(s) and can’t see a way of improving our situation.
    Are there resources available for us little people who are struggling to escape peonage?

  9. There is actually a ton “little people” can do to protect themselves. My book Juggling Dynamite talks about many of them. But here are some bullet points:
    -spend less than you make and save at least 20% of your income
    -pay off your house as fast as you can. If your house is too expensive for you to imagine paying it off within 10 years, then down size your house so that you can pay it off within 10 years.
    -pay off all of your debt first before you start trying to “invest”
    -keep the bulk of your savings in guaranteed deposits
    -don’t ever buy “investments” that others are selling you
    -don’t ever use “financial advisors” who make their money by selling you risk
    -while you are doing the first four items above you don’t need a financial advisor you just need your own personal discipline sustained over years of diligent effort
    -don’t look for a quick trick as this leaves you susceptible to the hype of risk sellers. Control your greed.

  10. C Cabrero says:

    Solid advice, can you take this a step further? … you have done all this, you have your retirement money, leaving it in guaranteed deposits will erode it over time, good advisors require more capital than you have…

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