In the not too distant past, when Wall Street firms hired new stockbrokers, they hired recent college graduates who had people skills. This strategy worked for decades when brokers, sometimes called Customers’ Men, focused on providing services such as research reports, investment recommendations, and execution of trades. Back then, fixed prices meant competitive advantage was based on service, service, and more service.
That all changed when commission rates, that had been fixed for 183 years, were deregulated May 1, 1975 and brokers evolved into product sales reps. Instead of service, their new role was to sell investment and eventually insurance products. There were two major consequences of this change for investors. First, when brokers are paid to sell, they are not paid to help investors achieve their financial goals. They won’t tell you that, but it is true. Second, sales became the most important knowledge for brokers. Any financial motivation to help investors became secondary to the production of revenue.
Companies no longer hired recent college graduates to provide services for two reasons. First, they "looked" inexperienced because they were young. Second, they did not have existing sales skills which were critical for producing immediate revenue. Instead, Wall Street firms began hiring representatives in their 30′s and early 40′s. If naive investors assumed these salesmen were experienced investment professionals, well, that was their problem. They should have asked the right questions.
The next time representatives try to sell you investment or insurance products and you are dependent on their knowledge to help you achieve your goals ask the following questions. How many years of financial services experience do you have? What is your educational background? Do you have any industry certifications or designations? Are you a member of any industry associations?
Never assume age equals experience and always require written responses to your questions so you have a permanent record.
By the way, the one part of the old business practices that Wall Street retained was hiring personable sales representatives. That was because the industry knows you tend to trust people you like and trust facilitates sales.