Suffer The Broker, Pinned Under The Paper Weight
The Age
Saturday December 4, 2004
WHAT do stockbrokers, car salesmen and estate agents have in common? A couple of things. They all take a cut on connecting you to a product they don't make.
If there's a pregnant pause in dinner party conversation, you can fill it up by bagging one of them mercilessly. Being a salesman is a skill. In its most basic form, the skill is to find out what clients want and connect them to it as quickly and efficiently as possible. The great thing about being an estate agent or a car salesman is that both make this connection once and then the client buggers off. The other great thing is that if the product goes wrong, they can blame the manufacturer. For a broker, and the broker's client, a sale is far more onerous. Apart from a "relationship for life", a broker's sale includes seemingly limitless years of liability for the advice. It's quite a burden. In this new era of greater compliance and liability, the broker/client relationship has inevitably changed. Brokers are getting choosier. They have to be. If they deal with you under the new legislation, they have to worry about you suing them, not because you should, but because you could.So, excuse the lengthy account-opening forms, excuse the "personal financial information" section that asks you what's up your skirt and what's up your spouse's skirt, excuse the request for a photo ID, excuse the eight-page statement of advice that you don't need (but your/our lawyer does), excuse the third-party authorisation form when you're dealing in your spouse's name, excuse the warning about the advice taking or not taking into account your personal financial circumstances, excuse the warning that the broker has an interest in the stocks he is advising you on, excuse the insistence on setting up a cash management trust and excuse the need for you to put cash in it (how rude, asking you to pay for the shares you buy; what is the market coming to?). Excuse the broker, it's not his fault. Brokers are intelligent people. They don't want you to have to go through all this just so you can get advice. But they have to. The alternative is that they are liable or you don't get advice at all. This is the point. The new legislation has raised the barrier to entry to advice for the clients. If you don't go through all this bureaucracy you are left without advice. No one will dare give it to you. Is that what the Government really set out to do? Alienate the investor from advice by putting in layer upon layer of bureaucracy to protect him? Cement investors to a broker because they can't be stuffed doing all the paperwork again for another one? Probably not. But that's what they did. Just suffer the paperwork. That's my advice. (Although I have to warn you, this is general advice only, I have an interest in giving you this advice and I haven't taken into account your personal financial circumstance, etc, etc, etc . . .) Marcus Padley is a stockbroker and author of the daily stockmarket newsletter marcustoday.com.auCOMING FLOATSCompany Money raised Proposed listing timeAllco Equity Partners $500m-$550m December 22Ambertech $8.5m December 9Anzon Australia $45m December 15Australian Value Funds Management $6m December 7Generator Income Trust $200m December 24Gullivers Travel Group $NZ104m December 15Hastings Diversified Utilities Fund $378m December 13IAG Finance (New Zealand) $500m-$550m January 12IBT Education $51m December 15LinQ Resources $65m December 13MacarthurCook Property Securities Fund $70m December 17Macquarie Airports Reset Ex. Sec. Trust $465m December 20Mahogany Capital $50m December 17Rubicon America Trust $32m December 6Souls Private Equity $50m-$100m December 16Total Communications Infrastructure $18.6m December 9Trinity Consolidated Group $78m December 14Two Way TV Australia $40m December 23United Kimberley Diamonds $10m December 9Verticon Group $74.82m December 21Vision Group $89.9m December 17
© 2004 The Age
