Start the conversation
On the surface, it seems great that Wall Street is finally paying real attention to average investors. For years, it was a poorly kept secret that big firms like Goldman Sachs Group (NYSE: GS) focused their efforts on catering to the rich. After all, a commission or advisory fee on a $100,000 portfolio is peanuts compared to that of a $100 million portfolio.
But now, Wall Street is starting to like those peanuts. When you take all individual investors together as a group, they are sitting on $72 trillion in cash. That's enough to make an investment bank or broker drool.
That's why some of the biggest firms on Wall Street are dropping their minimum account requirements. Goldman Sachs used to service accounts with at least $25 million in assets, but it's now adding clients with just $5,000.
So what's up here? We hate to be cynical, but there is a reason why Wall Street is suddenly so interested. After all, that war chest of trillions of dollars has been out there all along. But now, as brokerage commissions disappear and robo-advisors are eating into their fat fees, the gravy train has run off the tracks.
Just look at the rise of technology-based firms, such as Betterment, Wealthfront, Ellevest, and even Charles Schwab Corp. (NYSE: SCHW). All are digital platforms that provide algorithm-driven, automated financial planning services. No humans. No middleman. And no headaches. You just set it and forget it.
And the prestige firms of Wall Street want in on the action.
Here's why you shouldn't be fooled and steer clear of Wall Street's wealth managers welcoming you with open arms…