Is Your Financial Advice Coming From a Butcher or a Dietician?
The difference between a stockbroker and a financial advisor can be equated to a nice meal today versus a long-term healthy diet.
Picture in your mind that you’re making a special guest appearance on the “Tonight Show” with Jay Leno. The first question out of Jay’s mouth asks you to explain the difference between you and everyone else in your industry.
Could you do it? What would you say? Could you fire an answer back to Jay without grasping for the right words or “winging it” as most folks would be prone to do?
I’ve gone through this exercise a few times. I image I’m on the Tonight Show and Jay turns to me and asks, “So Roger, what’s the difference between a stockbroker and an investment advisor?”
“No problem,” I assure myself, slowly gathering my thoughts before confidently belting out, “Jay, there are six factors that highlight key differences between independent advisors and stockbrokers. In the next few minutes I’ll be happy to detail them for you. The first difference is that an investment advisor is held to fiduciary standards and the stockbroker is held to suitability standards. This all emanates from Black’s Law Dictionary which explains….”
Cut to commercial.
I just succeeded in putting millions of late-night viewers to sleep, and I’m not even 100 words into my expert explanation. And Jay ain’t too happy.
When we come back from the break he asks me to start over.
“I’m sure in your neighborhood you have an old-school butcher shop,” I say. “The one in my town was called Fligner’s Market. You know, the type of shop where you walk in and there are a bunch of old pudgy guys named Stevie, Louie, Johnny and Mike standing there in red stained aprons, gloves and hard hats. These guys know more about meat, more about animals and more about cooking that meat than any of us will ever know.
“So you walk in and say, ‘Hey Mikey, I’m barbecuing this weekend. What do you like?’
“Mike looks at the big racks of meat showcased behind the glass and says, ‘You know bud, the veal chops are just in from Tuscany and would go well with some grilled veggies.’
“And you say, ‘Veal, I can taste those cuts already. I’ll take ten. What do you have in the way of strip steaks?’ “‘Oh, we got strips on special this week for just $5.99 a pound. Just add a splash of our bourbon marinade…fantastic!’ Mike exclaims.
“Mike will never say to me, ‘Hey, Roger, you’re looking a little portly around the mid-section. How’s your cholesterol? Maybe you need to skip the steaks and go down the street to the seafood market. I hear they have some fresh salmon from Seattle.’
“He’ll never do that. Why? Because Mike’s job is to sell meat. The same way it’s the salesman’s job to sell me a new suit or casual business outfit when I go to Jos. A. Bank or Brooks Brothers. I trust my salesman to sell me a good product. I trust him and the fact that he has my interest at heart regarding my expectation for selling me whatever I want.
“By the same token, when I go to see a dietitian, I know she’s going to look at all of my labs. She’s going to take all the measurements and run all of her analysis. She’s going to give me her absolute best advice on
what’s best for me long-term. It doesn’t matter if she’s a vegetarian or a meat lover. It doesn’t matter if she likes tofu, soy or fruits and vegetables. If she thinks I should be doing something differently she’s going to give me an opinion that’s best for my interest.
Overall Financial Health
“So you may be wondering what does all this have to do with the difference between an investment advisor and a stockbroker? A stockbroker is a butcher selling you product. An investment advisor is a dietitian looking after your overall health. It’s that simple.
“The problem is that most people think that their butcher is a dietitian. So when they call their stockbroker and ask, ‘I just sold my manufacturers’ rep agency and I have an extra $250,000. What should I do with it?’ They’re going in thinking they’re talking meal plans with a dietitian, when they’re really talking take-out to Mike the butcher.”
So the next time you’re considering an investment, ask yourself whether you’re in it for a great meal tonight, or a healthy diet moving forward.
Roger S. Balser is the Managing Partner and Chief Investment Officer of Balser Wealth Management, LLC with more than twenty-five years experience. He works one on one with individuals to help regain control of their investment and retirement portfolio(s). Roger’s addressed a host of professional organizations nationwide and weekly give his two cents on the popular “Two-Minute-Tuesday.” If you have any questions about the particulars of your investment portfolio or retirement plan at work, or would like to discuss potential opportunities within the equity market, please contact Balser Wealth Management, LLC, 36873 Harriman Trail Avon, OH 44011, 440-610-3012, firstname.lastname@example.org, www.balserwealth.com