Sound Off: Getting Real in the Stock Market

Many people in the finance industry, such as financial advisors, are in the pretty position of making money whether their clients do or not. Their clients should remember whose boss and demand good performance.

Some people and institutions have the art of making money in the stock market licked. Personal trading coaches, financial advisors who take a percentage of assets, and companies that glean income from individuals who trade make money whether stocks go up or down (unlike the rest of us). They don’t have to buy and sell the stock market themselves. Rather, their profits are from others who invest in the market. They win no matter what.

Take for example, Denise Shull. Her company,, will coach both independent and institutional traders to do it better by using psychology and neuroscience principles. Others who provide similar services are Richard Peterson and Frank Murtha. They make money whether their clients do or not, though if they didn’t provide some help, their regulars would terminate the service. The good thing here is that the cash their customers pay is limited. There is no public measure of their results, but my best bet is that they wouldn’t stay in business if they didn’t do some good.

Financial advisors, on the other hand, are on shakier grounds. Their expertise is theoretically in picking winning portfolios. However, evidence is against them. Unmanaged mutual funds do better in the aggregate than managed ones, so why would financial advisors provide any value added service? Still, they make money because they get a percentage of their clients’ portfolio whether it has profit or loss every year, rain or shine. Some of you must be saying by now, “Where can I sign up?”

Brokerage houses are their own special kettle of fish. They make money too on every trade we make, whether we do or not. That is one reason that hyper traders, on average, make less money than occasional traders. They give up too much to their brokerage houses in fees.

Of course, we need financial advisors and brokerage houses. But note that we are the drivers. They are the providers. This means that we can direct them if we so choose, maybe not personally but certainly as a body. Sometimes it seems to me that this concept gets lost, not only on them, but on us.

Occupy Wall Street may have been right. Get verbal, even nasty and insist that your financial advisor and brokerage house is a servant to you, not the reverse. Those that skim too much off the top for their own pleasure at the expense of their clients need to hear about it and business brought elsewhere if needed. Then, only, will there be a change.