When it comes to building wealth, retirement planning, or any other endeavor involving money and investing, the person across the table from you – your broker – is not your friend.
He will tell you he is. She may even want to be your friend. This individual could be convinced they are helping people to achieve their lifelong goals. And they will almost certainly be friendly.
But, at the end of the day, the broker is a salesman, and his or her compensation is coming right out of your nest egg.
Now, I'm not going to tell you to "break up" with your broker or that they're a bad person; I'm not out to demonize the folks who sell investments for a living. Not at all.
In fact, it's in your best interest to continue your friendly association with your broker.
I'm telling you this because I want to level the playing field. So that next time you sit across from your broker, you're in control. Eyes open.
Ultimately, when you control that dynamic, you come out ahead.
Because you'll be able to go after the kinds of "unreasonably good" returns – 15%, 20%, or more – that can really make a difference in your life.
Why Your Broker Can't Be Your Friend
You and your broker have two fundamentally different objectives, as you'll see. I'd even go so far as to say you're working at cross-purposes.
Their incentives are not aligned with yours, and it is almost impossible for them to rationally act in your best interests. Expecting them to do so is like expecting the car salesman to care whether or not that souped-up, expensive sports car is the best idea for a married guy with four young kids.
Does this make them a bad person? No. They're just doing their job – and your broker's job is to collect your assets and get them into some sort of program that generates fees and commissions for his employer.
Everything they do up to the point where you sign on the dotted line is part of the sales pitch. Everything after that is customer retention.
Still, I am not among those who think all brokers are evil.
Sure, there are some "Wolf of Wall Street"-types out there, but the average broker is a pretty decent human being.
Most of them are great people, in fact. They do great things in their communities, and many of them are civic leader types. They give to charities and belong to volunteer groups that do good things.