OK, so I am somewhat biased because I run a fee-only advisory practice.
However, over the past 5 years, I have received hundreds of phone calls and e-mails from some of my 17,000 newsletter readers complaining about being misled by unscrupulous stock brokers, who were more interested in their financial well being than in their clients’.
Calling up a client and peddling a fund that will provide the salesperson with a great commission, but will do nothing for the investor, is simply unethical to say the least. It does remind me of the great commercial a few years ago with the now classic line “let’s put some lipstick on that pig.”
There are certainly a number of conscientious brokers in existence who have their clients’ best interest at heart despite being commission based; unfortunately, they are a minority.
To me, getting a client into an investment is only the first step. The second is to guide him along the way and make sure that his position is liquidated should market circumstances require that this is in his best interest.
An advisor can best represent this unbiased evaluation if he is fee based and not hungry trying to chase the next large commission checks.