Investors who do business with Wall Street firms are being bought and sold like a herd of cattle. Smaller, quaint, brokerage firms like Legg Mason are selling their clients to brokerage firms that were involved in the massive $1.4 billion dollar securities fraud settlement. Citigroup Global Markets Inc. (Salomon Smith Barney) just bought Legg Mason. If you have an account with Legg Mason, you, yes I do me YOU, have been sold to Smith Barney.
As is the case with most of these mergers (buyouts), the brokers of the acquired firm are coaxed into accepting a retaining bonus to stay with the new firm. These retention packages vary from 25%-50% of the brokers previous years fee's and commissions. As an example, if a broker produced (from you) $500,000 in commissions the prior year, they may receive a 40% retention or $200,000 to get you and the broker to stay with the firm.
Here is a quote in the August 2005 issue of Research Magazine from a Legg Mason broker. "Wow, I might have more products to sell my clients and that means my production could go up 10,20,30 or even 50 percent". Notice he didn't mention anything about your return going up, or how the merger will benefit you.
If you haven't made the move to become your own broker, I strongly urge you to reconsider. Many of the tools on this website can help you get started. Begin to research the various discount firms. Schwab, Waterhouse, Fidelity, and E-Trade will be a good start.
