RE:RE:RE:Investor burnout?Obscure1 wrote: A RBC salesmen calls up a client and says:
"We have a very short (as in overnight) window of opportunit to buy a new issue at $0.45 below the market price that yields 11%. It is a fund that has Enbridge as its only investment which is one of if not the safest investments on the stock market. As a new issue, there is no commission"
The client, who is relying upon the knowledge and expertise of their financial advisor and trusts that the broker is acting in their best interest will see the sales pitch as being a real opportunity and may very well thank the broker for thinking of them.
How many brokers that got their clients to participate in the new issue offering on Dec 10th, 2021 at a price of $15.00 actually told their clients that the underlying value (the NAV) was actually $12.67 per share at the time?
My guess is that the brokers were more focused on taking home the 2% commission instead of the 1/2% commission they normally earn.
Blaming the buyers of the new issue is legitimate in the sense that the client should do their due diligence before buying. However, how many clients actually know much if anything about ENS when the broker says that it is ok if they don't want to take a piece of the new issue, but the broker needs to keep calling other clients because he/she has to place their limited allotment in the next hour or the company will hand it to somebody else?
Good points!!
I would however disagree with the highlighted sentence. When people hire a broker/financial advisor, they expect that that person has done the necessary due diligence on their behalf and that is what they are paying that person for.
What this really reveals is the dark underbelly of the financial services industry where they are really wolves in sheep's clothing. In this case acting as a fudiciary but are nothing less than sales people.