Financial Planners' Report Swipes Brokers

By John Cunniff Ap Business Analyst | St Louis Post-Dispatch (MO), June 24, 1994 | Go to article overview

Financial Planners' Report Swipes Brokers


John Cunniff Ap Business Analyst, St Louis Post-Dispatch (MO)


A harsh picture of the securities industry, depicted as so greedy for commissions it often ignores the long-term needs of clients, emerges from a report released by a competing financial-planning group.

In the report, released this week, the financial planners say that the situation is worsened by an influx of young brokers and new investors and that it could result in sizable financial damage and a public outcry should markets hit a big setback.

William Anthes of the National Endowment for Financial Education, which released the report, says brokerage firms are not providing their employees with the resources they need to give customers sound advice. Instead, and despite promises to improve education and alter the way brokers are paid, "the overriding objective - indeed the only objective - of the majority of firms appears to be sales generation," he said.

Marc E. Lackritz, president of the Securities Industry Association, responded by questioning the objectivity of the report, pointing out that financial planners compete with brokers for clients. He termed the report's conclusions "dead wrong" and asserted that "client and customer concerns are the first consideration of brokers and their firms."

The report was especially critical of the brokerage industry's commission structure and educational requirements. It suggested that the entire culture of the industry should be changed to remove the emphasis on short-term results.

Peter Rowe, a spokesman for the financial education group, added that the situation now in the marketplace is ripe for a rash of suitability and misrepresentation lawsuits should the market turn down and reduce the value of client portfolios. …

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