September 3, 2010

Cash and your Stockbroker

Do you know why your stockbroker hates cash?
Because he doesn't get paid when you have cash on the books.

Its stating the obvious but stockbrokers and financial advisors get paid to invest your money, period.  Not watch it.  That's right, stockbrokers get paid only when you are invested, period.  They get paid either by commission when they buy something for your account or as a percentage of invested assets.  Neither of which is cash in your account.

This is a huge conflict on interest, in my opinion.  Think about it.  You send him some cash after a nice bonus and the market maybe looks tenious at the moment.  What do you think happens next?  Thats right, you get the call.  We need to invest this right away, and if that happens near the end of the commission month, well, you know the rest of the story.

This is just another reason that you need to handle your own finances.  Its not hard.  Its easy.  And you can rest assured that your account is in the hands of the person who cares about it the most, you.

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