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Wall Street’s Best Kept Secret

This secret strategy is one that no Wall Street advisor will ever spill the beans on. Trust me, I was one of them from 2004 – 2008. The strategy?


If you are reading this blog you understand the Wall Street Mindset & its goal to have you buy in emotionally, get your money, keep getting your money, keep it as long as possible and make it as hard as possible to get it back. The qualified plan (401k, 403b, IRA, etc.) is the perfect example of that.


These Wall Street backed vehicles lead to Wall Street’s best kept secret: the accumulation strategy. This strategy directly contributes to the goal of Wall Street’s best advisors. To understand why you must first understand how these advisors are compensated, then understand how locking your money inside of one of these plans puts a lot (a whole lot) of money into their pockets.


Wall Street advisors are commonly paid a percentage of AUM (assets under management). This means that they take a percentage right off the top of the total number of your investment dollars they have under their watch.


The accumulation strategy is a way for Wall Street advisor’s to continuously grow their fee structure based upon the money inside of the vehicle (whether it be a qualified plan or a mutual fund). The longer you keep it in that account the greater it (should) grow, thus leading to a larger % of money in the advisor’s pocket.


Now, you understand that within the rules of a qualified plan there is very little encouragement for its owners to take the money out for use. Who likes paying penalties and taxes when accessing their own money? Yuck. Thus, the Wall Street advisor need not worry about their annual fee income decreasing, for your wealth is hand-cuffed under his watch. Trust me, I was one of them from 2004 – 2008 until my thought process drastically changed.


Moral of the story? Before working with any financial advisor (on OR off Wall Street) please do your due diligence in asking how they are compensated. There is absolutely nothing wrong with making money (I am a devout Capitalist) however it is for certain that the advisor be looking out for your best interest. This is one of the questions I address and answer when meeting with my clients and those who wish to do business with me.


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