Topic: How To Invest

What is Pat’s commentary for the week of November 28, 2018

Article Excerpt

The financial industry has developed an extraordinary capability, honed over decades, to create titles for jobs and names for investments that obscure the differences and similarities from one to the next. In the past half century or more, for example, the term to describe an investment salesperson has changed from “broker” to “investment advisor.” Both descriptions are silent on the question of the advice, if any, that the salesperson may offer along the way, and the conflicts of interest that may colour that advice. However, the shift from broker to investment advisor puts more distance between selling investments and the related conflicts of interest. It steers the focus toward the salesperson’s advisory role. Regardless of what you call them, investment salesperson always earned varying amounts of money, depending on what they were selling. This gave them an incentive to advise clients to buy the investments that provided the broker more income, which also generated more profit for the firm. These investments tended to have higher…