Article - Personal Brokers: Now Just for the Wealthy?

Thanks to Mike Reese (email me to train with him at our next IRA College June 27-29th!) for sharing this article with me this morning...

As if brokerage houses needed another knock against them, now it seems that unless investors have enough money, they may not even be able to have access to a broker at all!  Many of the big names on Wall Street have started to adopt a call center system for those investors that may not have a big enough portfolio balance to make speaking with them profitable enough to be worth their while.  For those of you independent advisors out there that are meeting with these type of prospects (some with accounts up to $750k!), I don't know if there is a more powerful article to be sharing with them!

Excerpts and full link to article below...

It was tough enough to get your broker on the phone during the financial crisis. Now, unless you have a sizeable chunk of cash, you may not be able to get a broker at all.

Without much fanfare, some brokerage houses are raising the ante for investors who want access to a personal broker. TD Bank is phasing out its wealth-management services unit for American clients. Only wealthy TD customers—those with assets of $750,000 or more—will be offered what a company spokesperson calls “customized financial solutions” and a personal investment adviser. Clients with smaller accounts can still use the online brokerage firm TD Ameritrade, but those accounts won’t have their own individual brokers.

Merrill Lynch had already been sending customers with less than $250,000 to its Financial Advisory Centers, a fancy name for a call center. Now customers of Bank of America, which acquired Merrill in 2009, will face the same threshold to work with a broker; previously, there was no asset requirement. A Bank of America spokesperson says clients can choose whether to work with a call center, an adviser or Merrill’s online brokerage but that those with less than $250,000 would be better served by a call center.

Some say the moves create a different class of investors. “It will be challenging for them to get good financial advice,” says Bing Waldert, director of the research firm Cerulli Associates. Investors who complain can sometimes get a brokerage to back down, but some experts say clients might want to take their business elsewhere. “If they are trying to show you the door, maybe it’s not such a good idea to hang on,” Palaveev says.

Full Article