Tired of being a retail Broker

Hi Muslemoney,

I was an equity trader for about 17 years. I spent most of my trading career as a Market Maker for the # 1 MM firm in the 90's.
When they changed all the rules of MM(order display, penny spreads,etc) I left to trade my own account at Assent,a prop firm in NJ. I did very well trading all my life so I had plenty of money to fall back on. I am married with two small children 6 & 2 years old.
I did well my first year but still was going into my savings every month.When my wife became pregnant with our second child,I began to trade scared. (the end for a trader). I let my emotions take over and it was all down hill from their. Im not complaining,I have the house that I want in the neighboorhood I want to be in forever. I guess my point is what type of life style you need to maintain. Trading has gotten me everything I have,it is the greatest "job" in the world. Trading is 50% skill & 50% psycology,so dont let your emotional side turn you into a scared trader. I am now a financial Advisor with a leading financial planning firm. I love the job,but it's no where as exciting as trading.

Good Luck.:)
 
I have a question for all the ex-brokers (or the "still am a broker" ones). Regarding all this about compliance & trading too much... can you unpack that a little?

Let's take a common type of strategy, keeping it simple say some sort of O'Neil CANSLIM type momentum/growth.

You identify a stock and buy it for clients above a certain pivot point. This one happens not to work out and you want to stop out for say 10% loss. Is this what compliance doesn't like? Why don't they like it - are they afraid of being sued for churning?

Or is this some other issue entirely?

Perhaps another question. It sounds like some brokers solve these issues by going independent. Do client books tend to follow good brokers who go independent, or are they "sticky" to the original firm?
 
Quote from MichaelJ:

I have a question for all the ex-brokers (or the "still am a broker" ones). Regarding all this about compliance & trading too much... can you unpack that a little?

Let's take a common type of strategy, keeping it simple say some sort of O'Neil CANSLIM type momentum/growth.

You identify a stock and buy it for clients above a certain pivot point. This one happens not to work out and you want to stop out for say 10% loss. Is this what compliance doesn't like? Why don't they like it - are they afraid of being sued for churning?

Or is this some other issue entirely?

Perhaps another question. It sounds like some brokers solve these issues by going independent. Do client books tend to follow good brokers who go independent, or are they "sticky" to the original firm?
More...

Michael - the answer is easy - fear of being sued. Everything in the broker world, esp. the big firms, is about not being sued.

That's the goal - do not get sued.

How do you not get sued? Sell funds and managed products.

As for your example, there are no such thing as pivots on the retail side as far as compliance is concerned. Saying stuff like that will only get you red flagged. Each firm has their own recommendations and you simply use those.

Basically, as a broker, your job is to meet people and sell them what the firm tells you to sell. Your job is NOT to go out and be Mr. Stockpicker.
 
Quote from brownsfan019:



That's the goal - do not get sued.

Basically, as a broker, your job is to meet people and sell them what the firm tells you to sell. Your job is NOT to go out and be Mr. Stockpicker.
More...

could'nt have said it better myself....

Client's tend to be sticky to the broker, especially if you made money for them in addition to getting to know their family, visiting their second home on the weekends, etc. being chummy...

The business is actually quite nice if you are into the "relationship management", passing business cards out at cocktail reunions, networking, selling the firm you work for and then long-term investing, hand holding etc.....not all that bad if you are into that.

I always wondered why other borkers did not aspire to learn to trade succesfully while I was working there.....Imagine.... .an full education at your fingertips..... FREE. Eventually I hit me that most brokers don't believe it's possible to time the market, they totally eat all the sh_t fed to them by the firm. They think that trading consistently is something set apart for those blessed with some divine Ivy Leage education or some genius mathematician who has a strategy so complex no mortal will ever be able to figure it out.....

Brokers are in sales, they market to get the account open, then market to sell you packaged products and let's face it, financial sales is a highly paid sector of corporate america. So why would they really want to change....?

I guess it all depends on what you want to do....
 
Quote from Colombo:

could'nt have said it better myself....

Client's tend to be sticky to the broker, especially if you made money for them in addition to getting to know their family, visiting their second home on the weekends, etc. being chummy...

The business is actually quite nice if you are into the "relationship management", passing business cards out at cocktail reunions, networking, selling the firm you work for and then long-term investing, hand holding etc.....not all that bad if you are into that.

I always wondered why other borkers did not aspire to learn to trade succesfully while I was working there.....Imagine.... .an full education at your fingertips..... FREE. Eventually I hit me that most brokers don't believe it's possible to time the market, they totally eat all the sh_t fed to them by the firm. They think that trading consistently is something set apart for those blessed with some divine Ivy Leage education or some genius mathematician who has a strategy so complex no mortal will ever be able to figure it out.....

Brokers are in sales, they market to get the account open, then market to sell you packaged products and let's face it, financial sales is a highly paid sector of corporate america. So why would they really want to change....?

I guess it all depends on what you want to do....
More...

My problem exactly! I'm not "chummy," and have never been a coctail party kind of guy. I guess when I go what I call an "I'm richer than you" party, my drive to hit the phones, and be "chummy" goes away quickly.

I'd rather talk about things people at these parties usually don't, like trading psychology. All they know is they have a snob broker, and I'm just another broker wanting their business... Viscious cycle.

I guess you can say I'm more "hands on," than a salesperson.
 
Quote from brownsfan019:

Michael - the answer is easy - fear of being sued. Everything in the broker world, esp. the big firms, is about not being sued.

That's the goal - do not get sued.

How do you not get sued? Sell funds and managed products.

As for your example, there are no such thing as pivots on the retail side as far as compliance is concerned. Saying stuff like that will only get you red flagged. Each firm has their own recommendations and you simply use those.

Basically, as a broker, your job is to meet people and sell them what the firm tells you to sell. Your job is NOT to go out and be Mr. Stockpicker.
More...

Absolutely 100%!

Sell money managers, and funds (A shares if you want compliance to allow you to eat this week:eek: )

FINRA will make stockpicking for brokers a living nightmare in the years to come. Heck, they've already created a nightmare. The compliance beancounters are kissing the asses of FINRA and saying NO as a simple default.

Example:
Broker- "Hello Compliance Principal. I have this client who..."
Compliance-"NO!"
That's the theme of 2008...:(
 
Quote from musclemoney:

My problem exactly! I'm not "chummy," and have never been a coctail party kind of guy. I guess when I go what I call an "I'm richer than you" party, my drive to hit the phones, and be "chummy" goes away quickly.

I'd rather talk about things people at these parties usually don't, like trading psychology. All they know is they have a snob broker, and I'm just another broker wanting their business... Viscious cycle.

I guess you can say I'm more "hands on," than a salesperson.
More...

agreed....
 
I still have some buddies back at the firm where I worked and I couldn't take it if I was still there. Yes, the money can be very good but at what cost?

If you drink the koolaid, all is well but sooner or later people wise up to what they've been spoon fed.

And even when you do follow the rules, you are still on your own... example...

When I was selling, I sold quite a bit of CMO's that were AAA rated b/c they were insured! :D An easy sell actually - Mr. Client this product is insured, AAA rated and gives you a monthly income. Can't miss!

One problem - the firm never really explained how these worked... Been reading about bond insurers in trouble? Guess what? These CMOs are getting murdered...

What on earth would you tell someone after you did what the firm told you to do? Now, you are on your own island. Good luck b/c the firm will protect their interests before yours... Even if you do what you are told...

A few instances like that and you quickly wake up and say no thanks.
 
I think it has more to do with "Not knowing what the hell is going on" Than a deliberate intent to screw over the clients.

I learned my lesson back in 2004 when they were calling for EUR/USD at 1.50. They would come around the offices with the FX "expert" at that time and answer all your questions to the forbiden world of currency trading. What the guy said was kosher, he even got his picture on the cover of Bloomberg Mag.

Anyways, the FX guys would swashbuckle around the offices, swinging it long and far about how they had called the devaluation of the dollar and were continuing with the same song for 2005..... what a heartbreak that was.

Unluckily for my, I bought in to this and allocated a good 20-30% of each client who was willing to listen to EUR. We got in at around 1.33 after the dip in early Feb rode that sucker all the way to 1.16 and back to 1.33. Sold as soon as we broke even, mostly on client requests. 2005 was a painfull year to say the least.

No one really got hurt but it was quite painfull having to show your face. This is when I convinced myself that these "analists" are about as good as the dudes who got on the real estate wave and made a fortune.... no real skill to set them apart from the ones who were shorting the EUR that year. Just alot of Bla, Bla, Bla, Fat bonses and good production runs. If people really knew what went on TIL THIS DAY in the wire houses there would be alot of demand for financial education...

Luck is not a strategy and Fundamentals are awful timing devices when you are managing money.... this is why they preach.... be in it for the long term...."

Since then I read the reports but never again went with the flavor of the month product...
 
Interesting story Colombo. I'm sure we could go on and on with great 'research' recommendations of our firms... I can't even remember some of the tech names we were selling to people. One I remember was Charter Communications b/c we were still recommending it at like $5/sh or something. Once it broke $3 is when the final 'SELL' recommendation came... Those of us in the field were like - you have got to be kidding me.

Turns out there was some investment banking deal behind the scenes as well. Big surprise...

:confused:
 
You must log in or register to reply here.
Back
Top