The Essence of Retail Brokerage

Ever come across a simple, straightforward sentence or paragraph that perfectly captures everything you’re trying to convey about a given subject with only handful of words?  I did this morning.  It was written by Bruce Kelly, ace reporter at Investment News.

It is the very essence of retail brokerage:

“Shortly after Susan Fox bought a nontraded real estate investment trust for her IRA, the REIT started to show quarterly losses. But when she met with her broker to discuss her concern, he sold her a second nontraded REIT.”

Perfection.

For those unaware, a nontraded REIT is like a private placement real estate vehicle with huge internals fees to the broker who sells it and the firm that builds it.  It is illiquid and is predominantly broker-sold (because only an asshole would buy one of their own accord).  The primary selling point the broker makes when pitching a nontraded REIT is that “because its not private, its net asset value won’t fluctuate up and down in your account as much.”  Apparently this is enough for the broker to earn his 8% inside selling concession and to convince the client to waive their right to liquidity.

You already know where this story is going, but humor me and click over anyway.

Source:

Nontraded REITs: A cautionary tale (Investment News)

My book teaches you to watch out for this kind of stuff:

Backstage Wall Street on Amazon

 

 

 

This content, which contains security-related opinions and/or information, is provided for informational purposes only and should not be relied upon in any manner as professional advice, or an endorsement of any practices, products or services. There can be no guarantees or assurances that the views expressed here will be applicable for any particular facts or circumstances, and should not be relied upon in any manner. You should consult your own advisers as to legal, business, tax, and other related matters concerning any investment.

The commentary in this “post” (including any related blog, podcasts, videos, and social media) reflects the personal opinions, viewpoints, and analyses of the Ritholtz Wealth Management employees providing such comments, and should not be regarded the views of Ritholtz Wealth Management LLC. or its respective affiliates or as a description of advisory services provided by Ritholtz Wealth Management or performance returns of any Ritholtz Wealth Management Investments client.

References to any securities or digital assets, or performance data, are for illustrative purposes only and do not constitute an investment recommendation or offer to provide investment advisory services. Charts and graphs provided within are for informational purposes solely and should not be relied upon when making any investment decision. Past performance is not indicative of future results. The content speaks only as of the date indicated. Any projections, estimates, forecasts, targets, prospects, and/or opinions expressed in these materials are subject to change without notice and may differ or be contrary to opinions expressed by others.

Wealthcast Media, an affiliate of Ritholtz Wealth Management, receives payment from various entities for advertisements in affiliated podcasts, blogs and emails. Inclusion of such advertisements does not constitute or imply endorsement, sponsorship or recommendation thereof, or any affiliation therewith, by the Content Creator or by Ritholtz Wealth Management or any of its employees. Investments in securities involve the risk of loss. For additional advertisement disclaimers see here: https://www.ritholtzwealth.com/advertising-disclaimers

Please see disclosures here.

What's been said:

Discussions found on the web
  1. immediate edge commented on Sep 25

    … [Trackback]

    […] Info on that Topic: thereformedbroker.com/2012/04/02/the-essence-of-retail-brokerage/ […]

  2. DevOps consulting companies commented on Nov 18

    … [Trackback]

    […] There you can find 60808 more Information to that Topic: thereformedbroker.com/2012/04/02/the-essence-of-retail-brokerage/ […]

  3. 툰코 commented on Nov 29

    … [Trackback]

    […] Find More on that Topic: thereformedbroker.com/2012/04/02/the-essence-of-retail-brokerage/ […]

  4. imitation rolex watches commented on Jan 07

    … [Trackback]

    […] Find More on that Topic: thereformedbroker.com/2012/04/02/the-essence-of-retail-brokerage/ […]

  5. Da-Lite 84762 manuals commented on Jan 19

    … [Trackback]

    […] Read More here to that Topic: thereformedbroker.com/2012/04/02/the-essence-of-retail-brokerage/ […]

  6. tangerine online banking log in commented on Jan 22

    … [Trackback]

    […] Read More on that Topic: thereformedbroker.com/2012/04/02/the-essence-of-retail-brokerage/ […]

  7. cheap wigs commented on Jan 23

    … [Trackback]

    […] Find More Info here on that Topic: thereformedbroker.com/2012/04/02/the-essence-of-retail-brokerage/ […]

  8. bandar togel commented on Jan 23

    … [Trackback]

    […] Information to that Topic: thereformedbroker.com/2012/04/02/the-essence-of-retail-brokerage/ […]