New Plan for Wall St.

I would add at least 1 more salient point to Andrew Ross Sorkin’s NYT article “Where’s the Plan, Wall St?” I would completely do away with the Registered Representatives license, generally referred to as the “Series 7.” It’s outdated and banal. I have taught the material and even written several sample test questions in my day.

I can assure anyone reading that there is not one single question on how to make money nor on minimizing losses. Not one.  And it’s not the brokers’ fault either, frankly. They are poorly trained when it comes to handling risk. Should one get enough gumption to ask a manager for help, they are told for the most part to FOAG – “Focus on Asset Gathering,” and not worry about how to make money or minimize losses. “Let the managers do that.”

The overall NYSE Apprenticeship needs to be expanded from 120 days to 180 and training programs need to be rebuilt from the ground up – CFA style. Teach new hires about managing risk, how to keep losses small, and teach them alternatives to the ridiculous “buy and hold” and “quarterly rebalancing act.” Empower them to be in control and how to trade out of risk. Among other things I would teach are, how to use Stop orders, the dangers of dollar cost averaging, and understanding the correlation between asset classes.

You can’t say that equities have been the best assets class b/c it just isn’t so. Furthermore, it is not likely that we’ll have another 50 years like the last 50. Cash will always be king. It always seems so when you don’t have it anyway.

Why is this important? Your financial advisor is on the front lines. He or she is the one you’ll call. They truly want to do the best they can, but they need better direction from the top and they haven’t had that since EF Hutton spoke.