If everybody thinks we're picking on them, it probably means we're serving the people we're supposed to be serving: our readers.
In response to a request for an interview, InvestmentNews reporters received an e-mail the other day from a public relations person at a wirehouse. The firm’s spokesman wrote that he would “need to be convinced” why it would be in the firm’s best interest to make a senior executive available to InvestmentNews.
According to the spokesman, InvestmentNews has been “consistently hostile to the so-called wirehouses, highlighting every possible negative without much balance.”
I would like to address that point of view in a few ways.
First of all, I don’t believe our news coverage of wirehouses has been hostile or negative. We report about developments affecting all financial advisers, including those at the wirehouses, and that means coverage will include news about fines, censures, scams and other things that everyone wants to know about.
Apparently, everyone enjoys reading this coverage, especially when it’s about someone else.
We also report plenty of neutral and positive things about wirehouses, such as when one hires a big team or when a wirehouse broker is selected as a Community Leadership Award winner, for instance.
Unfortunately, most corporations are very thin-skinned. To them, any news coverage beyond a Fortune cover story canonizing a CEO is negative.
Taking wirehouses out of the picture for a minute, if you ask executives at companies in the other financial advice channels — independents, registered investment advisers and hybrids — about our coverage, they probably would say we’re negative about them too.
If everybody thinks we’re picking on them, it probably means we’re serving the people we’re supposed to be serving: our readers.
Second, we’re going to continue reporting on the wirehouses, whether they make their executives available for comment or not. As a former Wall Street PR person myself — I was the senior vice president of communications for the Securities Industry Association, which is now known as the Securities Industry and Financial Markets Association — I believe it’s always better for an organization to comment to the press and add its own spin to a story than not to comment.
The choice, however, is theirs to make.
Finally, in a stab at full disclosure, let me offer my own two cents about the wirehouse world.
In general, I believe many wirehouse brokers do a great job for their clients. My chief negatives, however, are two: the quality of service providers at the wirehouses is very uneven and clients often don’t know whether they’re getting impartial advice or sales talk.
About uneven quality: Wirehouses spend a fortune promoting their brands and implying that the Morgan or Merrill experience is of high quality, regardless who delivers it. But in real life, Mr. or Mrs. Investor can wind up dealing with a rookie, a vet, a planner or a product expert. There is no uniformity. Unlike a Ritz Carlton, where the service is stellar from Palm Beach to Palm Springs, the brands Merrill, Morgan, Wachovia and UBS can’t deliver consistency of service. And because those firms are so huge, the quality issue is hard to manage.
As far as impartial advice or sales talk is concerned, consistency is spotty there too. Only when wirehouses adopt a fiduciary standard will I believe that they truly are placing their clients’ interests first. Not that registered investment advisers are perfect — or that fiduciaries can’t be crooks — but the adoption of a business model that puts the client first would be a giant step forward.
As a former PR guy can tell you, it would make a great story.
