Oh boy, does that bring back memories from the fabulous '80s.(fabulous '80's for me, because I was still single, still had hair, driving around town in my red Trans Am Firebird) We used to be glued to the dreaded quotron all day updating 60 minute charts by hand. btw, they are not called brokers any more, they are Financial consultants now and you into a partnership with them. I believe they make most of their money selling REIT, Tax shelters, managed partnerships etc. You will be surprised there is still a small generation of reasonably wealthy people who like doing business the old fashioned way.
I read all the good replies with interest and they are all valid. Of course there are good brokers - actually they are now Financial Advisors - and then of course there are lousy brokers. The problem is that 95% are lousy brokers who don't even know how to open an account when they get past their training, what products they have to sell and how they work, or how to enter an order unless it's a market order GTC. In other words, they have NO clue and sell whatever the wire house is pushing. To say they are ignorant is being kind. In fact most of them are shysters as they do understand that they are selling the wrong investments to the wrong people for the wrong reasons. I know, I was one of them until I quit. I worked at one of the big houses and didn't have the heart to cheat that many people that often. The good part was that I met a friend who had worked the pits in Chicago for over 20 years who introduced me to technical analysis and changed my life. So there was a rainbow at the end after all.
you mean it's not still 1985???? You may have grown up in the 80's if: 1) Duran Duran had nothing to do with boxing 2) You have a 'members only" jacket in your closet 3) You had a square tie 4) You watch "Purple Rain" when it comes on USA channel 5) You own parachute pants but have never been on a plane in your life 6) You occasionally long for the taste of "Mesiter Brau"... 7) The first Boss you ever had was Bruce Spirngsteen 8) You wear your sunglasses at night 9) You know how to say "99 Red Balloons in German" 10) Not a day goes by when you don't wish it was summer of 198_.......
99 luft balloons. I was in junior high but i remember it. quotrons survived until the early 90's then started getting replaced with PC's.
Actually, Quotron was around longer than that. Just called Reuters now. However, my "Rueters" feed booted up as "Quotron" until about two years ago. If you want old feed names, try Bunker Ramo, or ADP...then you are going back a while. And when I left Merrill to go to EF Hutton in '87, Bunker Ramo was too cool. Because you didn't have to refresh to get a quote like on Quotron at that time. It was VERY HIGH TECH! They also had a system at Hutton called KIA (Know It All). I think they spent so much money on better stuff, while Merrill didn't that it may have contributed to their (Hutton's) downfall. Merrill, of course is still surviving (I don't know how). Peace, rs7
Actually, I'll take back the sweeping generalization that it shouldn't be paid. There are situations where such a fee is appropriate. However, I don't think this is one of them especially at this point. Ultimately, it depends on how high of a return one expects to receive. Most people in the market have done well in the last twenty years. It is the performance in the last three and going forward that is important. If one is expecting a return of 8% over the next decade and an inflation rate of 2-3%, you are essence giving up a thrid of the real rate of return. If you then subtract taxes paid on the whole 8%, you lose an additional 1.6% off your return. real return= nominal return - taxes - broker fee - inflation 2.4% = 8% - 1.6% - 1.5% - 2.5% The broker is taking almost as much as the client is making. Doesn't look like good plan to build wealth. If the person managing the account can return something higher, then they deserve a higher fee. However, how likely is it that most people will acheive this and should pay a higher fee? Not very. Does the broker put their client into the firms own funds? and thus generating more fees? Once in a while somebody asks me what they should do in the market, I tell them an index fund is a good choice. Low fees, good tax treatment and a long term historical record of going up are a couple of the reasons I say this. In effect, your broker is creating his own personal index. Some peolpe do better than others, however Standard and Poors does a better job than most though and has a track record to prove it. They are a mutal fund.
In effect, your broker is creating his own personal index. Some peolpe do better than others, [/B][/QUOTE] I agree with this, well put, and to the point.