The Villains

The Villains

First up is my personal favorite, Wally Street

Wally Street is my fictional name for people who work at Wall Street firms, Banks and Insurance Companies. You can read all about my friend Wally in my book, Meet Wally Street. The Reason You're Stupid. If you want to protect your money and yourself from being taking advantage of by Wally Street, then you will spend the laughing low figure of $3.99 on the eBook and read it from cover to cover. It is a great investment in your future.

Wall Street firms generally have a $250,000 minimum revenue quota for their FINRA Series 7 registered representatives. Also, if you have less than $250,000 in investments, they generally pass you off to a call center where the call center person is your financial advisor. Tons of people allow this to happen and stick with these Wall Street firms. These $250,000 and under clients are getting sold, more than likely, the highest revenue generating products. The call center person has a revenue quota, too! You have to be careful.

Most Wall Street firm reps (FINRA Series 7 registered representatives) have to sell $625,000 to $750,000 worth of products in order to meet their revenue quota. Their payouts are typically 30 - 40%. ($625,000 x's 40% = $250,000. They risk losing their job if they do not meet this revenue quota and lots of them do each year. Think about it. If it means selling you something in December with a high commission to reach their revenue quota and save their job, then they would be under lots of financial pressure to do it. Isn't that a conflict of interest? I do not mean to imply that these Wall Street reps are bad people. I am just pointing out the conditions that they work under. The major culprit is their business model. It puts these reps into the tenuous position of having to choose their job or your best interests. The temptation may be too great for some. Again, the real issue is the business model. If you stay with your Wall Street broker, then now you know why to watch out when December comes around.

Have you ever had your Wall Street financial advisor move to another firm? Generally speaking, a lot of the time it is because they failed to hit their $250,000 revenue quota. You may have heard a different reason from your Wall Street financial advisor, however.

Next up is Eddie Agent who works for one of the big life insurance companies, or perhaps a property & casualty agency.

Insurance agents love to use the words "Financial Planner" in describing themselves. Unless they are registered as an Investment Adviser Representative with a Registered Investment Adviser, then they are not legally allowed to use the term. Just being licensed with a broker-dealer is not good enough. Did you know this? Unethical insurance agents abuse this rule every day. Why? Because they want to sell you their investments which are typically Variable Annuities, Variable Life, Non-Publicly Traded REIT's, UIT's and Loaded Mutual Funds. They only need a Series 6 and 22 license to sell you these products and they are all loaded down with commissions.

When you think of investments, do you think of an insurance agent first? Nobody ever wakes up one day and says, "I am going to find a an insurance agent and invest my money with them." There is no way that you can convince me that you actually woke up one day and said I am going to invest my money with one of the major Life Insurance Company agents. Surely you didn't. Even worse of a decision is that you invested your money with a property & casualty insurance agent. You really didn't invest your money with a P & C agent, did you?

The big, major Life Insurance Company agents sell the same products as bank reps and Wall Street reps. The Series 6 and 22's are much easier tests to take than the Series 7 that bank reps and Wall Street reps have to take. Since that is the case, why would you do business with someone who right out of the gate has spent less time studying investments? If you do business with an insurance agent, either a life insurance agent or a P & C agent, then more than likely they have very limited investment skills, if they even have a securities license at all. A lot of these insurance agents imply that they are finanical planners or advisors, but in reality, they do not even have any securities licenses. See my Do your homework page to look up your insurance agent to see whether they have securities licenses or not.

Doing business with our firm is a much smarter decision. We work for you and we do not sell high commission products like Variable Annuities, Variable Life, UIT's and Loaded Mutual Funds that most insurance agents tend to sell.

Let's not forget about Billy Banks who works right around the corner from your house

Banks hire FINRA Series 7 registered representatives and generally they are paid 30 - 40 % of everything that they sell. Oh by the way, everything they sell generates a commission for the bank that they work for and they have to sell a lot of commission based products to make any kind of a living. Think about it. If you are making 30% in commissions for everything that you sell, then in order to make $60,000 a year, the Series 7 rep would have to produce $200,000 in commissions. ($200,000 times 30% = $60,000)

When you walk into your friendly neighborhood bank and they refer you to their financial advisor, financial planner, Vice President of Investments (don't make me laugh) or other term, there is an often undisclosed conflict of interest. The person referring you will get a referral fee if you open an investment account. Did you know that? Of course, they didn't tell you that did they? There may be a lot of other things that they do not tell you, too. Bank reps may be under so much pressure to hit their quota that they sell you inappropriate products that generate a lot of commissions. This is especially true if it is the end of the year and they haven't yet hit their revenue quota. You also have to watch out for these bank reps calling you in December, too.

Do not get me wrong. The people that work at Banks are not bad people. It is just the Bank's business model is out of date and puts those people in tough positions where they have to choose their own job over your interests. The major point is that you are always disadvantaged in this kind of business model arrangement. The Banks come first, the rep comes second, or excuse me I meant Vice President of Investments, then you come last.

Finally, how can we forget about the Ponzi Schemer?

Unfortunately, the infamous Bernard Madoff is not the only Ponzi schemer to steal money from investors. All you have to do is watch American Greed on CNBC and you will find that there is about one new Ponzi schemer per week. The best thing that I can do is to ask you to start with my Smart Advice page and then go from there to the other related pages below. By reviewing my Do Not Buy List and understanding the importance of Keeping it Public, Keeping it Liquid and Doing Your Homework, then you will be way ahead of the game.