It may seem strange to many of you, but there are a lot of people that are not doing any planning for retirement. And I am not talking about those that simply cannot afford to at this moment in time. Some people have the means to at least get the ball rolling, but don’t. One of the reasons is just plain embarrassment. There is a perception among the general public that using a stockbroker (or retirement planner, financial advisor or whatever else they are calling themselves these days) is either unnecessary or just flat out stupid.
And, you know what, for a certain segment of the population that is, at least partially, true. But for a large chunk of the population it most definitely is not. Unfortunately there is a stigma attached to brokers that in many ways is undeserved. Now, don’t get me wrong, the large brokerage firms have done enough boneheaded things to deserve a little comeuppance. For example, most charge quite a bit of money for their services, including unnecessary, annoying and excessive “fees” for such things as inactivity or IRA account “maintenance” (hello, Merrill Lynch!). But there are other factors at work that have hurt the “full service” firms. The “no-load” mutual funds and discount brokerage firms have successfully branded brokers as superfluous at best and greedy to the point of almost criminal at worst. And of course, cable business channels such as CNBC like to at least pretend that they are “helping” the little guy against the Wall Street big shots.
This has left some people in no mans land (no planning land?), torn between wanting to retirement planning even though they really have no interest in learning about it enough to trust themselves (at least at first) and not wanting to hire someone due to feeling “stupid”. For those of you in this category, the important thing is just do one or the other and get the process started. But, do not feel embarrassed about getting yourself a broker.
I have covered the reasons to get a broker before in a previous post, but it is relevant here as well. In short, yes, a large “full service” brokerage firm will cost you more money than if you do it yourself. There really is no way to get around that. What you are paying for is that “full service”– period. The big firms’ mutual funds are no better, their stocks are the very same one’s that anyone else can buy, and sometimes their “financial plans” are no different than any other computer printout from any other firm (although, not always, it must be said). But what you do get is a personal go-to guy (or girl) who will take your phone call, fix problems and answer questions. There is no 800 number with endless computer “prompts”, there is no “live chats” on your computer, and there is no runaround (or you better change brokers). No, you get to talk to an actual human being nearly every time you call (or he/she will return your call quickly).
For some people, of course, that is just not worth the added price. But for many others that sounds great and in addition, they get to learn as they go. Now, you wouldn’t know it from the internet or CNBC, but there are millions of people that do find brokers helpful. These big, full-service firms are big for a reason. They provide a service that lots and lots of people find valuable. The “experts” can opine all they want about how it is “stupid” to use these companies, but as long as people want “full service” they will always be around in one form or another. Most importantly, don’t let their disdain stop you. There is nothing to be embarrassed about in wanting some help. There are millions of people just like you. Go ahead and get started.
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