Brokers
"Anybody who listens to his broker...is doomed to make less money than the averages." Stephen Jarislowsky, May 1986
"If you use a broker as an advisor (a foolhardy practice generally..." p.183 One Up On Wall Street by Peter Lynch
"...the broker...is primarily a salesman..." The Battle for Investment Survival, Gerald M. Loeb
"Don't mistake brokers for your friends." Charles Ellis
"...if you let them [brokers] advise you what and how much to buy you are asking for trouble." H. Jack Stockton D.M.D
"Increasingly, brokers are selling mutual funds mainly because the commission rewards is far greater than individual stock sales." Second Opinion, Terry Curran page 24
"Most of the registered reps the customers are talking to are losers themselves who happen to be plausible salesmen."
John Train, The Money Masters, 1980 page 127
"Stockbrokers and investment advisors, for their part, too often have their own interests, not those of their clients, uppermost in their minds." The Investment Zoo by Stephen Jarislowski p 75 Read more along this line from pages 75 to 78 in The Investment Zoo. For instance, these statements at the top of page 78: "Stockbrokers typically are remunerated only through commissions. At the end of the year, they must have made enought trades to survive. They are not normally judged by how well you, the investor, does - only by what their annual commissions add up to.
• most brokers peddle momentum stocks p266 Value Investing by Greenwald et al (Value stocks preform better in most periods)
"Never base a portfolio decision solely on a broker's advice"... p217 Margin of Safety, Seth Klarman . Actually Klarman goes on and refers to brokers as a "hazard". "Many, however, are in the business primarily for the next trade." p. 217 Margin of Safety
"If your broker is like the vast majority, he or she has no idea how to help you. Most get paid a fee to sell you a stock or a bond or some other investment product. They don't get paid to make you money." The Little Book that Beats the Market p113
"I think a good deal of trouble arises because the broker is basically a speculator who looks more for capital gains than a steady and increasing income." James P. Thornton

Barron's of August 22, 2005 has a column titled 'Brokers in Sheep's Clothing' (with Fee Crazy as a sub-title) which had some ideas for protecting yourself from those may not be as honest as they should be. Here are a couple of paragraphs from the column by Edward Mahaffy.
"IS YOUR TRUSTED ADVISER really just a salesperson? Sometimes it's hard to tell, given all the titles used by brokers: financial adviser, financial consultant and financial planner, to name just a few. Many of these sound quite similar to "investment adviser" -- but there's a big difference. Investment advisers, unlike brokers, have a fiduciary duty to their clients. That means they have a legal obligation to place the client's interests ahead of their own, and to clearly identify all sources of compensation, the amount of compensation and any potential conflicts of interest."
"MOST BROKERS ARE PAID by a formula that increases the broker's portion of commissions and fees as revenue increases. For example, a broker might be paid 30% of revenue of up to $249,999 -- and 35% of revenue above that amount. This is retroactive to the first dollar, so when revenues hit $250,000, the broker effectively gets a bonus of 5% of the total, or $12,500. Some brokers will sell anything to anybody before year-end to cross that threshold. And the products they will rely on the most are the ones with the highest fees and the highest commissions, such as variable annuities and mutual funds with "loads," or front-end sales charges."
"FEE-BASED ACCOUNTS, which allow clients to trade as frequently as they wish for a fee of usually 1% to 1.5% of assets, can eliminate a broker's temptation to "churn" the portfolio to increase commissions. But the accounts, which are increasingly popular, encourage another form of abuse: The broker may suggest one for a client whose trading activity is low. Such clients would probably find it more sensible to pay a commission each time they trade. Morgan Stanley recently agreed to pay $6.1 million in fines and restitution for allegedly overcharging for fee-based brokerage accounts. The NASD said the firm, from 2001 through 2003, failed to identify customers in its Choice accounts who would have paid less in traditional, commission accounts. Morgan Stanley neither admitted nor denied the charges."
"SO-CALLED SEPARATELY managed accounts, a popular form of customized portfolio, can lead to unusually high fees. With these accounts, the broker charges a "wrap fee," with the broker's fee wrapped around the fee of the investment manager. And the broker's fee is often a good deal more than the manager's fee -- sometimes twice as much. Total annual fees can exceed 3%. When the fee is debited from the account each quarter, the broker's portion is not itemized, so the client is in the dark on exactly what the broker received."

"Brokerage firms favour growth stocks over value stocks" Larry MacDonald, Investor's Digest December 16 2005 This helps explain why, so often, stocks out of favour by yield, are not recommended by brokers. As a result, I read the 'Time to Sell' list on Investor's Digest's Morning Call page rather than the 'Time to Buy" list.
"Pay no attention to their [broker's] buy and sell recommendations" John Templeton paraphrased in The Money Masters 173

In his book One Up On Wall Street, Peter Lynch, the legendary manager of Fidelity's Magellan fund, discussed "street lag" p.41. "Street lag" is why you can't accept a recommendation by a broker. The stock a broker recommends is most likely over priced. Here's why. Lynch says "a stock isn't truly attractive until a number of large institutions have recognized its suitability and an equal number of respected Wall Street analysts (the researchers who track the various industries and companies) have put it on their recommended list." By the time the stock is recommended to you (street lag), is its price going to be higher or lower? Interesting thought, eh. Take the idea one step farther. It has to do with one of the Street's unwritten rules. "You never lose you job putting your client's money in to IBM."44. If IBM price falls, and the recommendation is questioned, the broker's boss will ask: "What's wrong with that damn IBM lately?". On the other hand, if the broker recommends La Quinta Motor Inns to a client, the broker's boss will ask: "What wrong with you (the broker)?" It's important for the broker to not to look bad is the recommend stock fails to perform: he or she will keep his or her job. Brokers, naturally, will take the safer path and recommend the 'good' stock, even though it is overpriced.

If you deal with a broker or if a broker is trying to land your account, read pages 183 and 184 of One Up On Wall Street . Also look at page 254.
"brokers, remember, can cite persuasive reasons for buying this or that stocks" p264 Value Investing by Greenwald et al
Many accounts are now managed 'downtown'. Once a broker has snagged you for the firm, he/she has little to do with your account. That's why more brokers are now seen on the golf course during business hours. The fees keep rolling in regardless.

Seneca College's Centre for Financial Planning is setting up a Financial Services Practitioner program in the fall of 2006. Course materials will be contributed by the insurance industry association and, according to Jonathan Chevreau in the Financial Post of July 17 2006, "The focus is sales and marketing". Sales and marketing? Hello! What about helping the client as the prority? I do not deal with financial planners and do not recommend financial planners to anyone. Most are just interested in generating fees. A recent survey by McKinsey & Co. Found much the same thing: "advisors - in particular brokers- primarily are interested in pushing products rather than providing unbiased advice and are placing their compensation objectives ahead of client interests".

The Banks: A Cheery Consensus (from The Connolly Report April 1995 page 334 -)
• Bank of Nova Scotia is given a "strong buy with a target price of $32.50 over the next twelve months" by RBC Dominion Securities in their March 1995 Strategy publication. "Bank of Nova has proven its ability to generate strong earnings through good times and bad...[and] has increased its dividend in 23 of the last 25 years. We expect the annual dividend increases to continue."
• Toronto Dominion is the only bank given a "1-Strong Buy" rating by Scotia McLeod's bank Analyzer. "We have the strongest earnings and dividends momentum over the next two years coming from the TD."
• Royal Bank is favoured by Richardson Greenshields. "[Royal bank was the] first of the banks to exceed street expectations in Q1: margins are under pressure but cost control in evidence...our target price of $32.50 and BUY recommendation remains intact."
• CIBC is the only bank given a "5" rating in the second quarter Nesbitt Burns Red Book. "We continue it believe CIBC shares offer the greatest upside potential among Canadian banks."
• Bank of Montreal is recommended by Levesque, Beaubien, Geoffrion in their Canadian Banks Annual Review. "We maintain our buy recommendation as we see very little credit risk in the portfolio and continued strong earnings."
• National Bank is given a "2" rating for timeliness by Value Line. "At this time, only one of the Canadian banks is an attractive selection for relative performance in the year ahead [National Bank] and none are appealing for capital gain appreciation over the 3 to 5 year pull, in our opinion."

I see a number of messages from this data I collected over ten years ago:
If each of the banks was recommended by at least one brokerage firm: they must all be all good investments.
Which one to buy? It doesn't really matter, does it. What do you need a broker for? As long as you have the basics covered, your guess, at any point in time, as to how the stock will do in the future, is as good as their guess, or mine.
I use yield to discern value in a stock. I'd buy the bank with the highest yield (providing it had a dividend increase last year). In April of 1995 it happened to be Bank of Montreal with the highest yield. In June of 2000, National Bank had the highest yield (3.35%). In January of 2006 it was CIBC with the highest yield at 3.6%(CM dropped over $ billion on Enron). In August of 2007, it's National Bank with a 4.3% yield (commercial paper crisis). Currently the highest yielding bank is ....

One broker I would not deal with, for sure, is Edward Jones. Why? Four reasons:
• Edward Jones is based in St Louis: it's American.
• Edward Jones's parent in St Louis, agreed to pay regulators $75 million in fines for failing to disclose lucrative revenue sharing arrangements with seven mutual funds families. This makes one wonder.
• Edward Jones brokerage research of Canadian equities is done in the States. Imagine!
• Edward Jones seems to be more interested in expanding in Canada "meeting 1,000 people face to face" than in helping their current Canadian clients. And Edward Jones' expansion is supported by Canadian mutual fund executives. That tells me a lot.
R.O.B. April 18 2005
• In Investment Executive's 2005 Brokerage Report cart, Edward Jones' consumer web site was rated last (12^th) by its own brokers. Investment Executive May 2005

I plan to add more to this page before too long - re-read and revised a bit in August 2007

"Anybody who listens to his broker...is doomed to make less money than the averages."
Stephen Jarislowsky, May 1986