You have to look a long way back on the calendar to remember a week this tough for the market. October 2008. I remember it perfectly because I’d JUST left my colleagues sitting in the ivory tower to start my shop, July 25, 2008. Some would say my timing was perfect. Others, luck. But either way, I was one of the insiders unplugging from the machine. I’d realized the stench of it all & couldn’t turn back. I had to leave.
And probably most sadly, while I was there, my clients really, truly thought I was gleaning all of this wisdom & knowledge from inside the hallowed halls of Wall Street. And as a result it was going to benefit them in times like these.
So, let me set the record straight. 75% of your advisors’ time is spent managing the bureaucracy that is their firm (because the firms are so big they can’t trust any one of the faceless masses that work there). I mean really, passing the series 7 is not that high of a bar to entrance.
The other 25% of the time your advisor spends in the office is “gleaning” free lunches & some golf balls from a relentless army of freshly minted wholesalers who are giving them “great & timely market ideas.”
Now, ask that well dressed fee-based advisor at UBS, Merrill, MorganBarney, *insert* any of the the majors, ask that advisor sitting at that faux cherry desk (that you pay for). Ask that person if they get paid when you go to cash. After the color returns to their face, you’ll get your answer. No. Uh…No they don’t.
And if you do want to go to cash, you’ll get the same BS response– “Hang on, ride it out, asset allocation, don’t want to miss the best 10 days”. blah blah blah. Meanwhile all they are thinking, “Please don’t go to cash, please don’t go to cash…”
And maybe it’s the right decision. I know my clients will sleep well tonight with all of the cash we are sitting on right now, but you will NEVER hear it from them — the insiders — you will never hear about the option that pays them nothing. And just another reason it’s good to be on the outside. Because sometimes Cash is kind. Sometimes Cash is king.
So, I think I have some solutions to these problems and a ton of the other problems I see in the industry. I plan to start writing about them here. Wall Street is ripe for change.