Fool.com: Kissing Your Broker Goodbye (Fribble) October 7, 1998

Wednesday, October 7, 1998

Kissing Your Broker Goodbye
by Michael Giudicissi ([email protected])

This is it. Your palms begin to get sweaty. Your heart leaps to beats-per-minute not seen since the last time you make a fourth down and one rush to the pantry for that big bag of Greazies Best Sweet Potato Chips. Your eyes begin to tear.

You my friend, are about to say goodbye to your full-service broker.

How could a newborn Fool such as me know of such adult-minded things? Well dear Fools, I have just jettisoned my illustrious full-service broker so I know of what I speak.

You see, old Cornelius (not his real name, thankfully) was a nice guy. I repeat... a nice guy. That made him a trusted ally in my novice investment career. He actually did make one good recommendation to me -- to buy ENMD at 13 (I made the recommendation to sell at near 50). Corny's other suggestions returned slightly less wealth, though. The loaded mutual funds (5.75% per pop). The dollar-cost average investments (5% each) and the Wisest investments of all -- are you ready? Drumroll pleeeeeaaassssseeee -- The Safe Stocks. I actually paid for this advice? I have yet to divest all of my "safe" stock investments, but so far I am averaging a -19% (yes, that's negative nineteen percent) return on them. Anyone want to pay ME for advice like that? If so I will gladly email you a list of Corn Man's picks and I won't even charge you for them! I've paid for them twice already, so why should you?

Now onto what to do after you make this tumultuous breakup. First, calm down. Things could be worse (YOU could be a full service broker). Second, do some research. In a scant 15 minute online foray I found online discount brokerage trades from $7.95 to $30.00. The level of services available vary greatly from broker to broker, so decide what you need and pay accordingly. Do you need research? Why not pick it up for free here on the Fool? Need real time quotes? Probably not (if you think you do, check out my last fribble). Need to talk to a broker? Why not talk to that brick wall in front of you? It's cheaper and the responses will likely contain similar information. If the wall starts sounding smarter than the broker though, please call a doctor quick (and tell the brick wall to give me a call).

You can and should manage your own money folks. Your full-service broker is a salesman (which by the way, so am I). Selling is a noble profession but salesmen get paid commissions. In the case of full-service brokers, their only compensation might come from commissions. What would you do? You would encourage your clients to buy and sell. You would have to in order to make a living. In case you are new, or in case you caught a case of Wiseitus, you should know you can pay low commissions, get high returns, and invest Foolishly. The recipe for success has never been easier.

Hey, got to go, the brick wall is on the other line with a hot tip! Later.

[Hey Fools, why not pen a Fribble, yourself? We welcome submissions from readers. Just click here and read the "What's a Fribble?" item, pen a short masterpiece, and send it off to TMF [email protected].]