How do brokers keep clients from leaving?

[.sigma]

For example, when events such as COVID-19 occur, i'm sure many people have called up their brokers (presumably older folk) and demanded they liquidate their accounts because of the fear of a market decline or other reasons.

I'm writing a paper for class about this topic and need some ideas, wondering if anyone has any experience or advice? Thanks!

 

[Overnight]

For example, when events such as COVID-19 occur, i'm sure many people have called up their brokers (presumably older folk) and demanded they liquidate their accounts because of the fear of a market decline or other reasons.

I'm writing a paper for class about this topic and need some ideas, wondering if anyone has any experience or advice? Thanks!

They tell them to look at market history, and say that no matter the problem, buy-and-hold always works out in the end, provided you are young enough to survive the roil and do not need the money to retire with in the next 10 or so years.

Shit like that.

 

[gaussian]

They tell them to look at market history, and say that no matter the problem, buy-and-hold always works out in the end, provided you are young enough to survive the roil and do not need the money to retire with in the next 10 or so years.

Shit like that.

One of the most profound things I've read is that there are no speculators in the Forbes 500 but there are many, many investors.

As much as people in this forum scoff at the slow methodical buy and hold there are more millionaires created every single day following a simple Peter Lynch style of investing than anyone trading futures, options, or some mix of them. Even the boy plunger himself moved onto investing after losing and gaining multiple millions.



To answer OP - they don't. Some people that are young can be persuaded to stay but the commission the broker is making off of Joe Nobody's IRA isn't worth trying to keep. The pikers throwing paychecks at options are basically funding everyone else's free trades.

 

[Nobert]

Probably 80%~ of them had small accounts in the first place, so nothing to worry about for brokers.
(the image of such type of an investor is one of the worst ones, if not the worst)

Here's why do i think so :

most of the time - one can't be good at investing/trading and an idiot at the same time.
Analytic skills are associated with higher cognitive capacity and that would be more than enough to analyze the vary basic data on flu.

And if they called to them as you say, then those accounts were almost empty for sure.
(using phone/not having your own platform (?) + fomo/fear of the crash, everything points out on someone who is unskilled. Don't know how could they have a decent account up to this day, without blowing out prior multiple times due stupid choices, so minority of accounts that would be)

Again, that's only 80%~ i guess, & eventually, they will be back.
(with that stimulus check)

 

[MattZ]

For example, when events such as COVID-19 occur, i'm sure many people have called up their brokers (presumably older folk) and demanded they liquidate their accounts because of the fear of a market decline or other reasons.

I'm writing a paper for class about this topic and need some ideas, wondering if anyone has any experience or advice? Thanks!

Here is what you write: When a customer wants his money you send him his money. The end.
Some may want to close because they need the $$, some may not be able to stomach the volatility and some may have better opportunities for their $$.

 

[Tradex]

Probably 80%~ of them had empty accounts in first place, so nothing to worry about for brokers.

Well, if a trader makes too much money consistently, his Forex broker will ask HIM to leave (since a few of them bet against their clients).

 

[Nobert]

Well, if you make too much money consistently, your Forex broker will ask YOU to leave (since a few of them bet against their clients).

Probably 80%~

20% ~ remains

Like your knowledge on fx tho
(by coincidence liked few of your posts prior you quoting me)

 

[gaussian]

Here is what you write: When a customer wants his money you send him his money. The end.
Some may want to close because they need the $$, some may not be able to stomach the volatility and some may have better opportunities for their $$.

Don't interpret this the wrong way but I'm curious about your particular situation.

You're an introducing broker, right? So you just handle trading for clients, providing advice, etc. Commission work.

I think your case is special and maybe worth OP putting into his paper. The motivations of a brokerage house (one who keeps the cash in a sweep, perhaps investing it) vs. you, an introducing broker who makes majority of their money operating commission services is probably different.

Would you mind comparing the differences? Obviously I understand you must be careful what you say. But it would be enlightening to everyone to sort of peer into the motivations behind your type of brokerage vs. a full service brokerage who may make money on resting cash.

 

[deaddog]

Probably needs a different thread but does anyone actually have a broker these days. I'm an old fart and have been with an online discount broker for at least 20 years.

 

[MattZ]

Would you mind comparing the differences?

The form of compensation, or investing/trading method is irrelevant to this discussion (in my opinion).

The customer's concern is liquidation because of market decline. The broker/financial advisor/money manager could provide advice and alleviate concerns, but you must respect the customer's risk tolerance and final decision.