Wall Street gets a bad rap

Written by Max Osbon on December 24, 2013

It’s easy to blame the monolithic brands of Wall Street for selling us products poorly suited to our needs, or charging fees that empty our pockets to fill their own. It’s easy to blame them for enticing us with hot stock tips, slick hedge funds, exclusive private equity issues, and once-in-a-lifetime IPOs, none of which may be right for us.Wolf-1

But isn’t this the same kind of blame often aimed at McDonalds for making us fat?

Like it or not, many of the most successful businesses in the world reach that status by selling us products we don’t really need, or services we can’t afford. Our stores are full of products that underwhelm, wrapped in packaging that overpromises and supported by ad campaigns that get us to say yes when common sense would say no. Americans are such good consumers we even buy things we don’t want.

Advertising doesn’t help. Relentless ad campaigns condition us to crave foods that make us obese and diabetic. We wait in line for the opportunity to fight over toys our kids will quickly forget. We envy our neighbors when they buy the most gigantic and expensive TV known to man.

Get beyond the blame

Sure, it’s easy to blame the sellers, but is it fair? We should all understand that even the most famous firms in the financial industry and good, decent people who work there may not have our best interests in mind.

We should not forget that iconic Wall Street names must generate many millions of dollars each year just to pay for ad campaigns, lush headquarters, well-appointed satellite locations and multiple layers of management…and that customers ultimately foot that bill.

We should recognize that many products – including proprietary offerings on which brokers may earn enhanced commissions – may be designed specifically to benefit the sellers at the peril of buyers.

Of course, this is all just normal business. Sellers sell and buyers buy. Ultimately there’s no point in blaming Wall Street or anyone else. We’re responsible for our own actions and decisions and the consequences they produce.

Follow the money

In the investment world taking responsibility means learning about service providers, products, and investment strategies before saying yes. It means asking questions of providers about how they are compensated and by whom. It means picking providers based on facts, not just name recognition.

We welcome your questions about the Osbon Captial fee-only, index-only, ETF-only business model. We work every day to improve our offering and control costs. And as registered investment advisors, we are bound by a strict legal requirement to always put client interests first.
Give us a call at 617-217-2772 – we’d love to hear what’s on your mind

 


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