An ongoing shortage of brokers might alarm Wall Street, but Fools shouldn't panic. This non-event won't affect you much.
These days, many brokers call themselves "financial advisors." But while that term does include smart and talented individuals looking out for your best interests, it also includes flat-out salespeople trying to get you to rack up as many juicy commission fees as they can. Now, for several reasons, the ranks of these brokers have begun to thin out.
The shortage and the solution
For starters, with our economy in sorry shape, many brokerage firms haven't wanted to hire. Instead of developing new talent, many asset management companies have focused on poaching experienced advisors from their rivals. Making matters worse, many advisors are approaching retirement. (Less than 25% are under 40.)
Thus, Merrill Lynch, now a part of Bank of America
Unfortunately for those brokerages, that solution's not as open-and-shut as it sounds. Training just one employee can cost as much as $300,000, few trainees end up paying off handsomely for their employers. Turnover is high.
Also, times have changed. As Josh Brown suggested in a Wall Street Journal blog, many young people won't be so interested in the job: "Your typical compliance department forbids even the sending of tweets, and personal Facebook accounts are 'discouraged.' Can you imagine pitching this industry to 22-year-olds with a straight face?"
In addition, Americans have grown savvier about investing over the past few decades, making them less likely prey for hungry brokers. Today, numerous excellent and affordable brokerages charge $10 or less per trade, instead of what could be hundreds of dollars elsewhere. These brokerages increasingly offer the services of financial advisors as well. Schwab
So if you're looking for terrific investments, consider finding them on your own, or seek some trusted guidance. Consult a financial professional when you need one. Just don't worry about a shortage of people who'd otherwise be calling to try to sell you something.
Longtime Fool contributor Selena Maranjian does not own shares of any companies mentioned in this article. Charles Schwab is a Motley Fool Stock Advisor pick. The Fool owns shares of Bank of America and Wells Fargo, and through a separate account in its Rising Star portfolios also has a short position on Bank of America. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.