[jedalton]

Originally Posted by rsmurano

Who makes money 100% of the time, you or your broker when using a broker to handle your investments? When the market goes down, do you get a break from your broker commissions? Worse, if you lose money because your broker isn't very good and the market is going gangbusters, do you get a rebate from the broker?
You know the answer to all of these questions.

1 brokerage firm that has tried many times to hook me into coming over to them, that also has the commercials with "we do better when our clients do better", I just laugh when I hear this. Why??
Say I have millions of dollars in my portfolio, if I would go over to this broker, or any broker, they will charge me a fee up front based on my portfolio value. Say I have $2M portfolio, any broker would want me to pay .5% to 1% ($10,000 to $20,000 depending on fee) up front. WHY? the broker didn't get me this money, I did. Plus, every year after this, I will be paying at least this much (give or take) depending on your portfolio gains and losses. Again, they didn't do anything for me on the initial $2M, but I will be paying on that amount forever. At the same time, no broker can guarantee me that they will make more money with their investing picks than what I can do. There is no way to know how a broker has done for their clients that I have found either, so you are relying on a salesman (never) or by a friend who has used them. Before listening to my friend, I would need to see proof of his gains/losses over the past 5-10 years, not just that they are a nice broker.

As for skin in the game, I would recommend (would never use 1) a broker that would charge a 1% fee on the gains they made me, not based on my initial portfolio value. The more money they have to work with, the easier it would be for an experienced broker to make me money so they can make money. If they don't make money, they don't make money.
For example: say I gave them a $2M to invest, and they did well and made me $100,000, I would pay them 1% of that $100,000 gain, not the $10,000-$20,000 fee that they would charge me for the $2M I gave them. Also, if they lost me money, then they would make no money, or better yet, they would give me 1% of my losses.

You know no broker will do this methodology, they want to make money whether they do good or not and on money they never did work for.

yes and no. Most people have no idea how to check out a broker, (FINRA) has ever registered broker there with their entire history listed there. If they have ever been sued, fined, sanctioned or any other problem. IMO, always use a R.I.A. (registered Investment advisor). They have to give you an ADV form at your 1st meeting, which is a FULL disclosure form, that has to be updated annually. RIAs will have a fiduciary responsibility towards their clients, which means that they have a moral obligation to give financial advice that is always in the best interests of their clients. Directly supervised by the Securities and Exchange Commission (SEC), RIAs are deemed to be operating in a fiduciary capacity and, therefore, to have a higher level of conduct than licensed agents. This standard trustee mandates that the RIA must always unconditionally put the best interests of the client ahead of its own interests, irrespective of any other circumstances.
RIAs are also expected to report any potential conflicts of interest to their clients and to behave ethically in all of their business dealings. A few RIAs charge their clients with a percentage of their assets under administration, while others charge an hourly or flat fee for advice. Advisors who choose this model for their practice must obtain a Series 65 license in addition to other investment license. You can find any SEC-registered investment adviser’s Form ADV on the SEC’s Investment Adviser Public Disclosure (IAPD) website. There, you can perform a Form ADV search for any firm using the firm’s name, location or Central Registration Depository (CRD) number, which is the license number the industry regulatory authority FINRA issues to firms. What can a Form ADV search tell you?
There’s a wealth of information inside a Form ADV. We’ll help you navigate each section like a pro and highlight the information you’ll find in each part.
Form ADV Part 1a
Part 1 is a disclosure that’s in a check-the-box, fill-in-the-blank format, which is not the most exciting to read, but it does contain helpful information, such as:
• States licenses. You can see the states where the advisor is licensed to do business under Item 2.C: State Securities Authority Notice Filings and State Reporting by Exempt Reporting Advisers.
• Employees, clients and compensation. Find the number of employees, advisors and clients the firm has, client types and how advisors earn money in Item 5: Information About Your Advisory Business.
• Assets under management. See how much money others have entrusted the firm to manage and the firm’s total number of clients in Item 9: Custody.
• Disclosure information. See if the firm or its employees have been subject to regulatory actions in the past 10 years in Item 11.
• Disciplinary action. If the firm or its employees have disclosures, you can get the details of all disciplinary actions and resolutions in DRPs (Disclosure Reporting Page).
Form ADV Part 2
Part 2 items are generally an easy read and broken into two subparts: Part 2a and Part 2b.
Part 2a
You can think of Part 2 as a marketing brochure that explains how the firm works, its fees and how it handles clients’ money. Inside this PDF document, you’ll find much of the same information in Part 1, but more detail on the firm’s fees, commissions, investment offerings and strategy and any potential conflicts of interest you may encounter as a client. We won’t say it’s a light read, but we will say that all firms must report the same information in the same sections. So, once you’ve read a couple of Part 2 brochures, you’ll know that Item 7 is always “Types of Clients” (the kinds of investors a firm serves and any investment minimums).
If the firm changes how it does business, it must clearly outline the changes in Part 2a when it files a new Form ADV each year, then offer you a revised brochure.
Part 2b
Called the “brochure supplement,” advisory firms must provide you with a Form ADV part 2b for each person who provides you with investment advice. This includes anyone at the firm who makes discretionary investment decisions on your behalf, even if that person never has direct contact with you.
Form ADV Part 3
Form ADV part 3, called the “Relationship Summary,” is the easiest part of the form to digest. The advisor must summarize in “plain English” much of the information in Part 2, including services, fee structure, conflicts of interest and disciplinary actions. And yes, it’s a much easier read than a Part 2 Brochure.
Part 3 also includes key questions to ask an advisor and how to get more information about the firm.

From a retired R.I.A. with 23 years service and not 1 complaint filed against me or my firm.