I was in the lobby of my bank today and I overheard a conversation between the bank’s stockbroker and one of his clients.
The two of them sat in a glass-walled cubicle with no privacy, and I could hear their every word as I waited for a manager to help me open a new savings account. The stockbroker was a distinguished looking gentleman, probably 60-years-old or so.
He had white hair, dark-rimmed glasses, and he sported a suit and tie. He had a look of sophistication about him. His client, on the other hand, was a scruffy looking man in his 40’s, with a beard and ponytail, dressed in a t-shirt and jeans.
Why Do They Call Him A Stock Broker? Because He’s Broker Than You
This is one of the oldest jokes in the book, but in the example above, it was probably true. I don’t know how the stock broker’s client had accumulated his wealth, but from the conversation I overheard, it was clear that he had done well.
He certainly didn’t look the part of a trust-fund baby, so it’s probably safe to assume that he got his money the old-fashioned way – he worked hard for it, probably by starting a small business that grew into a not-so-small business.
The stockbroker, on the other hand, was working at a bank in what should have been his retirement years. He had the pompous air of unearned wealth, but it was undoubtedly all a fraud. Still, he acted as if he knew it all and his client knew nothing. Sadly, while the former clearly wasn’t true, the latter seemed to be.
Where Does a Stock Broker Get His Information?
In the old days, a stockbroker was a profession of power. Only stockbrokers had access to the information that was necessary for making informed investment decisions.
But nowadays information about stocks is abundant. This is similar to how real estate agents used to have an informational advantage, but they are slowly fading into obsolesce as advances in technology like the internet make buying and selling a home on your own a little easier each year.
Stockbrokers have no value if they don’t wield informational power, and in today’s world, they simply don’t.
Take my experience in the bank today. The stockbroker was literally navigating Yahoo! Finance and showing the client charts of his stocks.
He verbally explained the chart patterns with such simple language as, “As you can see, it went from 50 to 60, back down to 55, and now it’s been puttering around at 53.50 for a few months…”
Worse yet, the stockbroker actually clicked on “Analyst Opinion” to tell his client what other analysts were saying about his investments – the client was paying his stockbroker in order for the stockbroker to tell him what actual experts were saying! Unbelievable!
Don’t Be Like This Stock Broker’s Client – Do It Yourself!
But even more shocking was the fact that the client seemed happy with this service. He seemed to think that his stockbroker was an investment genius because he knew the URL to Yahoo! Finance and how to navigate around the site.
Clearly, this stockbroker did not possess any real knowledge or aptitude that his client could not attain or develop for himself. Although the client had made wise decisions for himself in the past, it’s unlikely he’ll hold onto his wealth unless he develops his financial intelligence in the near future.
Don’t be like this client – be your own stockbroker!