We see in the media about the million dollar contracts signed by NFL and NBA stars. The numbers are so high that we normal people cannot relate to them. Who do you know that makes $10 million a year?; they don’t live in my neighborhood. Neither does Bruce Willis but every time he signs to star in a movie, his $20 million salary always makes the news.
Do you think those contracts should be made public? Should any sector of our business sector be able to keep contracts secret? Do you really care?
I can say that I don’t care, but I know someone who does, the Securities and Exchange Commission (SEC) and the financial industry regulator FINRA care.
If you have dealt with a stock broker who works with a specific company and then makes a change to a new company has it affected you? Generally the new company will have the same services as the old company. The broker may call and explain the reasons; it could be better support, nicer offices or any one of a dozen reasons. The broker will ask you to move with him and your relationship with that broker will generally determine your choice to stay or move.
Ever wonder why a broker makes company changes? Do you really think it depends on a nicer office? Better staff? No it depends on one simple thing:
The new company is buying the brokers business and paying a lot of cash to get him or her to move. The amount can be in the millions for a large producer.
Here comes the problem, the SEC and FINRA want the broker to disclose to you how much he is being paid to change companies. They think disclosure makes the field more level or they think the broker may be making changes to better his personal finances. Whatever the reason, disclosure seems imminent.
FINRA has approved the disclosure but it is up to the SEC to make the final ruling. Do you think they will approve it like all large bureaucracies they may just sit on the issue and hope it goes away?
Things move slow at the SEC.
My opinion! I could care less how much they get to move around, what I care about is full and simple disclosure of fees we are being charged for doing business with a broker. I know we get the prospectus, but reading hundreds of pages of legalize small print can wear you out.
Simple and easy to understand disclosure of fees and expenses.
Then let the brokerage companies spend massive money to lure brokers back and forth. One last point, where do you think the brokerage houses get the funds to recruit new brokers? From the fees you are charged for doing business with them.
Demand simple and easy to understand disclosure of fees and expenses.
Before the SEC allows for brokers to get richer and richer, why not a simple disclosure on fees, that would be something that would help us as consumers and a far better use of government funds.