Financial Advice is More About Trust Than Money

An OpEd piece written by our managing director, Greg Mech, has been published on MarketWatch.

“Brokerage firms have a long history of pushing product, as investment banking, capital markets, sales and trading businesses each function as competing, stand-alone profit centers within larger organizations. In concert, they manufacture products which are then distributed to customers of the firms. The primary source of revenue for each of these profit centers? Those same customers. No amount of disclosure can entirely mitigate such misaligned incentives.

“…It is critical to understand how much you are paying, to whom, and for what. The problem is that fees are often intentionally opaque. For example, UBS’s 2017 fee disclosure document is 33 pages long; Morgan Stanley’s runs 26 pages. Complicating matters is that many advisers simply dodge the question (or, worse, don’t know the answers).

“So how does an investor pierce the fog? Essentially, there are two types of fees. One is for advice. The other is for products. Both are rational. But both must be fully disclosed and understood.”