Wall Street is keen to tell you how the Chinese wall is all that’s needed to protect the interests of the everyman. And that’s fine. Goldman can rationalize all day everyday in front of Senators that they can take market moving knowledge and create a product, trade the market (without any bias) and then still tell you, the millionaire next door, how to manage your money (without necessarily disclosing how they are using this market moving knowledge for your benefit or detriment). Sure… ok.
So, now take a look at this: Institutional Profits vs. Wealth Management (AKA Retail) in 2005. I used 2005 for a simple reason; I was lazy & it was the most recent data I had on hand– it was also arguably the sweet spot for most of these banks (remember things actually started coming undone in late 2007).
But you tell me… if Client A gave you 10% of your profits and client B was 90%, which would you pay more attention to? Where would you spend your time? On the 10% or the 90%?
Discuss amongst yourselves…