Longboat Retirement Solutions LLC

The Price You Pay for “Research” July 18, 2012

BY: Lars Forsberg

Longboat Retirement Solutions LLC


Large investment banking firms make money by raising capital for big corporations, merging these corporations with other large corporations, and getting those corporations to buy other corporations.

Brokers make money by selling stock in these corporations, recommended by their research departments, to investors who assume the “research” is unbiased and created to benefit the investor.

Research is created to sell brokerage services so that brokers can solicit trades from the retail public, institutional investors, and hedge funds.

So, as a small investor you are essentially paying fees to your broker, who gets research from investment banks, who need to create reasons to buy stocks to raise capital for large corporations.

…or worse yet, you are paying your “advisor” to tell you what stocks to buy.  This is another layer of fees for “research” of questionable value.

Is there anyone who wonders why there is collusion both internally and externally?

Notice any moral hazard?