Thursday, May 27, 2010

Broker Check

So, I got a call yesterday from a registered representative at TD Ameritrade. Apparently, he was going through a list of customers who never talk to any of the brokers and reaching out to us "self-directed" investors. Nice guy. Seems to know what he's talking about, so I accepted his invitation to come on in for a sit-down in a few weeks. At the very least, I'll learn something, I figure, and it might be fun to track the story on this blog. Frankly, I thought the "kid" would have been more impressed with some of my answers. For example, he asked "which strategies I'm using to pick stocks for my accounts," and I told him that I typically look at a company's 10-K, focusing on the income statement primarily, and I try to buy equity in solid companies trading at reasonable valuation ratios.
Nothing. Not even a semi-impressed "hmmfff" from the guy. Clearly, he was on a mission to sell bonds through the idea of "asset allocation," so he pressed me a bit on why a 46-year-old investor is 100% invested in stock. Well, I said, interest rates have to go up from here, so I don't want to receive historically low yields and then watch my bond holdings plummet when interest rates rise. Bonds can still be an important part of your portfolio, he countered. It was then I remembered that registered representatives are not engaging in academic discussions--they are SELLING. Period. If they've been told to talk about "asset allocation" and push bond investing, then, by golly, that's what they're gonna do. And that's okay. I'll still learn something by playing the role of the customer to a registered representative--up to now, since 1999, I've been buying and occasionally selling stock and options without anybody's assistance. So, I've never had a broker try to do a needs analysis with me or hand me product literature on variable annuities or mutual funds. It will be interesting to hear how many of you will be explaining investment products and strategies to your clients. I did have to deduct some coolpoints from the guy when he asked which email he should send the invitation to. "Should I use ''," he asked. I let him think about that for a second, but, alas, no connection to the SERIES 7 was ever drawn, not even after all I had just spewed about inverse relationships and valuation ratios. I'm thinking that maybe some registered reps go into auto-pilot mode when smiling and dialing and are not so much listening as waiting for their turn to speak. Oh well. I'm still going to the meeting. I figure I'll learn something to help my investing as well as a thing or two that relates to the Series 7. Sure hope the guy is as ethical as his background implies, because if he tries to violate any FINRA rules, I will definitely be blogging about it.


  1. I guess you gave him some pretty good objections that your email address didnt register, he was probably thinking of how his game plan could of gone better.

  2. could be, but I agreed to come in for a sit-down pretty early on. I was only explaining why I wasn't in the bond market currently. Unfortunately for him, his plan involved combining an IRA with a SIMPLE . . . which can't actually be done. Haven't heard back from him since the back office pointed that out to him.