You may have thought that fancy trips arranged by big banks for their top stockbrokers ended with the financial crisis. Think again.
Such junkets are back in style, according to
The Wall Street Journal. For example, it cites a jaunt to Hawaii by a few hundred top Morgan Stanley stockbrokers and their spouses in April. The activities included golf and deep-sea fishing.
Upon arrival at the Ritz Carlton hotel, guests were presented with "pillow gifts" of GoPro cameras and Maui Jim sunglasses, an attendee tells The Journal.
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To be sure, those in the industry say the junkets are more than fun in the sun. "Pre-recession, those trips were nothing but fun, but those are never coming back," Steven Dudash, a veteran financial adviser who is now president of IHT Wealth Management, tells The Journal.
Still, "I understand why in the public eye it would be frowned upon," he says.
Not surprisingly, banks defend the practice. "Recognition trips are important both for rewarding the accomplishments of successful advisers and building a constructive, cohesive culture," a Morgan Stanley spokeswoman tells The Journal.
The bank has changed the trips since the financial crisis to make them more work-related, she notes.
Meanwhile, James Sanford, founder of financial advisory firm Sag Harbor Advisors, recommends several questions to ask your financial adviser in a piece for
CNBC.
- What commission did you earn on the stocks you sold me? Even if your adviser didn't receive a commission, they might have earned a mark-up or you might pay any spread.
- Would you be willing to show me where your money is invested?
- Would you be willing to get paid only if my portfolio makes money?
"It's so important to educate yourself as an investor to make sure your financial adviser is putting your needs ahead of his," Sanford notes.
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