As I stated in my last post, the culture of Wall Street Banks has always been about selling with little regard for investors, and why not? Like every other business, the goal is to maximize profits and you can’t maximize profits selling T-Bills. But unlike other businesses, the Financial Services Industry works very hard to give the false impression that they are providing objective investment advice, not “selling” products.
If my customers had had an opportunity to sit in on a typical sales meeting I am certain they would have been horrified. (Probably why our sales meetings were held in the basement.) “If you can’t sell it with a clear conscience, we’ll get people who can!” Or–“If it takes you more than one minute to give the sales pitch, you are taking too long!” (This was after each one of us received our one-minute egg timer.) These exhortations were standard fare in our sales meetings, and I didn’t blame the sales manager, he had quotas to meet.
Being a CPA and having a conscious was both a blessing and a curse. I was able to read and actually understand the Prospectus. Very few in our office could and that was by design. Of course, the investor was required to sign a statement saying they had read and understood the Prospectus basically signing away any future rights they may have should the investment not work out as projected.
Most investors never got past the one page summary before investing. As an accountant, after reading the Prospectus, I had questions for the Sales Manager regarding the suitability of certain products/investments. The manager would respond with, “you don’t have to sell it, but I don’t want you talking to any of the other Account Executives.” When I left, his only comment was, “I will never hire another CPA.”
Understanding what you were selling was the blessing of being a CPA, the curse was the negative impact it had on my potential income. Success in the Financial Services Industry is measured solely on production, the amount of revenue generated for the firm. I never saw an award for delivering the best investment experience to the clients. But then you would not expect that when the culture is all about selling.
My experiences are rather dated, and that is the point, nothing has changed! And with Wall Street providing the big bucks to our politicians, don’t expect much change in the future.
Later this week I will talk about the clever use of Zero Coupon Bonds, in the 80’s. Lots of very creative products that were very toxic for investors.
Wheeler Writes 
Hi Dan, I was part of that culture for 20+ years before finding Matson Money. The pressure every month to make the almighty “PC”(production credit) was daunting. You work for the “company” and not the client. You get brain washed that you are doing the right thing for the client by selling their wonderful packaged products or picking the stocks their research says to buy. It has to change. People have to understand Wall Street firms are not there for them, but to make money for the company at the expense of the client. Love your comments. Keep it real!!