Page 3 - Trading #101 Course – Part THREE: SETTING UP YOUR BUSINESS – www.traderscoach.com

TRADING #101 COURSE – PART THREE: SETTING UP YOUR BUSINESS – WWW.TRADERSCOACH.COM

During those times, most folks hired a broker to manage their money and to make
entries and exits into the market. They trusted the broker to do what was best for their
financial stability.

Most brokers are basically salespeople, and if you go into a firm and ask, “Who is the
best broker here?” you’ll most certainly be directed to someone in a private office who
has the largest portfolio of assets under management. The problem is that the broker
may not be delivering a high annual yield on clients’ accounts; instead that broker is just
talented and the best at acquiring lots of new and big clients.

In a bull market, most financial advisers like this all look smart. It is during a bear market
that you can really pick out the truly talented advisers from the mere salespeople.

The truly talented advisers see the bear coming, convert a large portion of your account
to cash, and preserve your capital. They’ve got your asset allocation in line with your
goals, consider your age and tolerance for risk, and have your best interests at heart.
They’ve got a contingency plan, and they’ve probably given you a “business plan,” or
“investment management plan”, to review and comment on. This plan outlines the goals
and objectives for your portfolio over the next 5, 10, and 20 years.

In contrast, the pure salespeople do not have your best interests in mind, will attempt to
churn your account, and will sell you whatever the head of their firm is pushing that
week regardless of whether it is the right move for you. And they probably have not
taken the time to map out your plan for you on paper, because that frankly will take time
away from the cold-calling for new prospects that their boss insists they do every day.

How do I know this?

Simply because I’ve been there, been a registered securities broker for the big wire
houses, and been in the position of doing what’s right for my clients regardless of what
the firm wanted.

There’s a conflict going on in the big brokerage houses that the average client doesn’t
ever see. The conflict is that is the brokerage firm’s primary goal is to increase its
revenue, which sometimes is in direct conflict with increasing the client’s revenue.

Now, this is not to say that there are not amazing and talented financial advisers
available to you. It is to say, however, that they are few and far between and you’d best
do your homework before handing over your portfolio to a broker at a big firm.

If you do take on an adviser, continue to closely monitor the activity in your portfolio on
a quarterly basis. As the saying goes, past performance does not guarantee future
results.

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