Best full service broker | General financial discussion | Discussion forum

I would like to see where it has been proven in peer reviewed research that using full service brokers and following their advice makes people better off in, say, ten years, than having a diversified portfolio of ETFs which are rebalanced regularly according to generally accepted criteria.

I'm not saying such evidence doesn't exist, but I've never seen any and would be interested in reading such a study.

Edward Jones routinely does well in customer satisfaction surveys - I have not used them but some of my close associates have. Despite paying a lot of attention to customers they don't shine particularly brightly when it comes to returns. They do seem to practise one-size-fits-all advising, though my sample is not particularly large.

And they were solidly stay-the-course in the 2008/9 collapse. (Trailer fees, anyone?)

Apple products fail a lot and have crappy guarantees (which often require customers to pay for the guarantee!), but they have very high customer satisfaction because the buyers feel they gain status from the flashy stuff that sells to celebrities.

I am reminded of that very successful management book by Jeffery Gitomer, "Customer Satisfaction Is Worthless, Customer Loyalty Is Priceless." (Bard Press 1998)
RetirEd

Loonie said
Somehow, I can't be bothered watching a video from someone I don't know anything about who can't spell "criticize". Just my idiosyncrasy, no doubt.

You can rail all you want against ETFs, with or without reliable evidence, but I'm still waiting to hear about the research that shows full service brokers do better. If ETFs are as bad as Bud suggests, the evidence should be easy to find.  

For those who deal with full service brokers, they can and do provide all the performance data you are asking about - and can compare the performance of one's portfolio against a multitude of benchmarks or indices.
Loonie - Don't assume all ETFs do better than what full service brokers do - depends on the ETF and the broker/advisor. If you have a friend or relative who deals with a full service broker, they can enlighten you on all the research you seem to be craving.

Bill said
Many years ago I took a part of my portfolio to a carefully vetted (and referred by acquaintance) full service broker, working for one of the big banks, to try him out. My benchmark essentially was beat the 5-year GIC ladder approach by a material margin and my growing pile stays, couldn't care less about the rest. The results, so far, have easily beat my expectations, so it stays there. With zero time on my part, no spending time transferring amounts, arguing about transfer fees, etc, etc that I hear about regularly here. But some people are darned if they're gonna pay fees to a fat cat (as if the rates on GICs don't reflect the cost of people getting paid to sell them), they'd rather spend lots of time on managing and fretting about their money the diy way, etc, etc, so whatever floats your boat. And it's not like you can't also have HISAs and diy discount broker accounts too, it's all part of a varied portfolio.

The main other first-hand experience with full service brokers I have was with my parents. For maybe 25 years they let a guy from Edward Jones in Toronto handle their investments. I got involved in the last few years of their lives when they couldn't manage any more and when I asked my Dad, a guy who knew zero about financial instruments outside of Canada Savings Bonds and GICs, why he was paying this guy all these fees he told me that guy was the reason they had a comfortable, worry-free retirement (plus was now a friend who came over regularly to brighten up some old folks' day and enjoy Mom's baking!). Came to their funerals too. Anyway, when I looked into it Dad was absolutely right, guy was a very nice man too, so I just left things as they were. Plus the transition to my parents' estates when they died couldn't have gone smoother.

The numbers, research, etc re full service brokers vs whatever is irrelevant, the only thing that matters is the performance of the specific person handling your money. Like anything in life involving another person, it all comes down choosing very carefully, all the wrong ones you don't choose remain other peoples' problems.

Positive vibrations! (right, topgun?!)  

Excellent comments by Bill. I had some similar experiences. Not all brokers/advisors are dishonest, incompetent as suggested by some members of this blog. Many are professional and decent - obviously do your due diligence before engaging.

Here's my experience for what it's worth. In 1979 after the sale of my first house, I had some cash to invest so I opened my first investment account at Richardson Greenshields. The broker I got was completely useless. She consistently called me with some new scheme that went bad every time and ended up costing me money. Also bear in mind this was in the days of $49.00 trade commissions so she was basically churning my account for commissions. I stopped taking her calls, and not long after that GreenLine Investor Services opened the first discount DIY brokerage in Canada. I was one of the first to open an account with them and transferred my securities to GLIS and closed the Richardson's account. (Interesting anecdote: It's the only time I ever held an actual stock certificate in my hand.) I've been with GLIS which is now TDDI since then. Based on my experience I would never use a full service broker. If I make a bad investment decision based on my own research and intuition and it proves to be a wrong decision, then that's a learning experience that will benefit me in the future. I've learned a lot in over 40 years of investing and have done quite well on my own so that I was able to retire at age 55. I would never again put myself in a position of allowing someone else to make investment decisions for me. This is anecdotal evidence of course, and does not prove that all full service brokers or advisors are bad it's just my story.

canadian.100 said

For those who deal with full service brokers, they can and do provide all the performance data you are asking about - and can compare the performance of one's portfolio against a multitude of benchmarks or indices.
Loonie - Don't assume all ETFs do better than what full service brokers do - depends on the ETF and the broker/advisor. If you have a friend or relative who deals with a full service broker, they can enlighten you on all the research you seem to be craving.  

Actually, I do know such people. My best friend uses a full service broker at a major bank, has done so for years, and is happy with this person. Friend has no clue about finance, doesn't compare returns with DIY, and is under the illusion that when it says "Vice President" on the person's business card that it means he has an executive role in running the bank.

Spouse had one for several years at Nesbitt Burns, now BMO. That guy was a disaster as fully half of his recommendations lost money and the other half did not gain enough to justify it, over many years. Fortunately, spouse did not invest a huge amount with him, but we would have been way better off with GICs or garden variety mutual funds, as it happens.

I do know that they produce all kinds of internal curated data. That was not what I was asking about.

I also don't assume they are all duds. I never said that. The risk is as much in what they sell as who sells it.

Y'all seem to think that because I mentioned ETFs, that I consider them the gold standard, and someone thinks maybe I should be using GICs instead as a measure. Actually not the case on either point.
GICs are not comparable because they offer security of investment which broker is not designed to do, so it would be apples and oranges, and then you would complain that I'd made the wrong comparison on that basis, which would be true.
I choose ETFs as a comparitor, because they are the DIY alternative. It's the best way for the brokerage industry to demonstrate added value in exchange for added fees. I don't "assume" ETFs do better than full service brokers, and I especially don't assume "all" ETFs do better, as has been alleged. I merely ask for independent peer reviewed study of the industry. I have no doubt that some brokers somewhere can surpass a well managed portfolio of ETFs. But the question raised in this thread is about finding one who can be expected to do that. I think the odds of doing so are poor because, if it were the case, then everyone would be flocking to them., whereas it appears the traffic is in the other direction. I would be very interested in knowing that I am wrong in my hunch. You might even persuade me to change my approach, but it has to be good solid independent data about the industry.

No appropriate studies, indeed no studies at all, have yet been presented on this thread.

Nor has anyone even offered a list of questions and criteria or interview tips which one might use in selecting a broker. What we are getting instead is essentially "this guy worked out well for me, therefore Loonie is asking the wrong questions".

Readers can make what they will of it. It doesn't make any difference to me what you invest in or how you justify it. Good luck!

I remember years ago in the 80's and 90's, I had some extra funds can't remember how much but over $50K anyway. I had an older gentleman from Scotia McLeod as my broker. Honestly, I didn't have a clue about stocks especially in the 80's. He treated my as though I was his daughter. At first he put me in treasury bills. I think they were paying between 15-19%. He didn't throw me into stocks right away as the TB rates were so good. then after awhile he put me into "blue chip" stocks. So I purchased shares in CIBC & BNS as well as BCE, Bombardier and Moore's. I remember losing some in Moore's. The rest I did well in. Anyway, I eventually cashed in to purchase a home. He was great, he always kept me informed and explained everything to me in detail. Don't know if they have people like him anymore. For a very small period of time I was in mutual funds with Investors Group. I had taken a buy out at work and wanted somewhere to place funds. I didn't stay long. Talk about pressure. You would think I was there to buy a second hand car. I would NEVER deal with them again.