subject: How Much Of Your Money Is Going To Those Fat-cat Wall Street Bonuses? [print this page] We keep hearing stories about all those big Wall Street brokerage firms giving out multi-million dollar bonuses. Ive even heard of a secretary getting a bonus of over $200,000! So how do you know if its happening to your money, and what can you do, if anything, to prevent it?
The problem starts with where youre getting your investment advice especially if its from people that work for the Wall Street brokerage firms. You know, the Merrill Lynchs, the Morgan Stanleys, UBS, Goldman Sachs, and all those firms you hear about on TV.
Even if you pay a fee instead of commissions, the problem is the fees are collected by brokerage firms and then paid back to the broker as an employee of the brokerage firm. So the broker who works for the brokerage firm is motivated to recommend products which will be highly profitable to their employer because thats whos signing their paycheck, not you! Compare this to independent advisors, where clients pay a fee to the advisor and thats who employs the advisor.
Then there are those hidden expenses the big firms charge you for. As long as fees and expenses are disclosed, a brokerage firm isnt breaking any laws by doing this. The problem is, they tend to disclose them in a manner that makes it darn near impossible for the average person to find them, let alone decipher them. Their fees and expenses are disclosed technically but its in fine print taking up page after page after page of text.
We went through one brokerage account and found over $6,648 per year in investment fees and expenses. Thats an example of where the money is coming from to pay these fat-cat Wall Street bonuses multiply that by every investor they have, and you can see where it all comes from.
I got curious and applied what we think is a typical Wall Street brokerage firm expense component to how we do business at our firm, and we estimate that were saving our clients collectively almost $2 million a year in hidden fees and expenses compared to if they had been using a brand name Wall Street brokerage firm.
And guess where that $2 million would have gone?
So the bottom line is when it comes to fees and expenses, you have to look at the small print, or get somebody to do it for you, to truly know and understand what your total fees and expenses are with your investment accounts.
Thats something that a firm like ours is more than happy to do. I suspect that your typical brokerage firm is not gonna be as eager and anxious to disclose all the hidden fees and expenses in simple easy to understand terms.
Have your brokerage companynot just your broker but an officer of the brokerage company put in writing all of your fees and expenses.
It might not stop them from paying those huge, fat cat bonuses. But it will at least give you an idea of where your money is going.
Copyright (c) 2010 Brian Fricke
by: Brian Fricke
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