There have been some ugly whistle-blower allegations, yet again, that one of our mega-banks, J.P Morgan/Chase — that only survived due to our generosity — is paying us back by spitting on us, ripping off the very people who chose to invest in the brokerage arm of that bank.
The allegations are so similar to what’s being reported in recent years about full-commission stockbrokers.
Here’s what typically goes on at these brokerages: A manager calls their stockbrokers in to a meeting and tells them they need to push a particular product to their clients — one that the company has a big stake in. And these whistle-blowing brokers have reported that the pressure to sell these products is intense–regardless of whether they are the best choice for their clients’ individual accounts.
One broker reports that one of the J.P. Morgan exectutives even told them outright that “they are not there to serve the client.”
The banks used their power and influence after the financial crisis to block a requirement that full commission stockbrokers would have to do what’s best for each client. So when you do business with a place like Merrill Lynch or J.P Morgan, they’re really not required to look out for you. They can load you up with fee garbage, crummy investments and other things that are just there to score more money for the bank.
One of the things the brokers allege is that Chase didn’t even allow them to reveal to their customers the performance of the investment they were pressured to sell.
So here’s what you need to know: Be very wary if you do business with a full-commission stockbroker. If you do, know that their loyalty is not to you — it is to fatten their own pockets.