January 22, 2025 • 10 mins
Chris draws a surprising comparison between slasher films and investment advice, highlighting how private equity takeovers are leaving investors vulnerable. Reflecting on decades in the financial industry, he shares the evolution of investment models, the pitfalls of high-commission products, and the dangers of private equity firms acquiring advisory businesses at inflated valuations. Protect your portfolio and learn how to avoid becoming a victim. www.watchdogonwallstreet.com
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
The Watchdog on Wall Street podcast explaining the news coming
out of the complex worlds of finance, economics, and politics
and the impact it we'll have on everyday Americans. Author,
investment banker, consumer advocate, analyst and trader Chris Markowski.
Speaker 2 (00:16):
Investment advice and slasher films comparison between the two, anyway,
She looked it up. The original Halloween with Mike Myers
that came out in nineteen seventy eight. There's been thirteen
Halloween films. You want to go to Friday the thirteenth
there with Jason Vorghez. I think it's been about eleven
(00:39):
of those films as well. And it's kind of funny
because basically the same thing over and over again, you know,
slashing people, people doing dumb things. What was it that
recent commercial on TV where the kids are getting chased
by a slasher and they go hide in a h
(01:02):
they go hide in the garage filled with chainsaws. Anyway, unfortunately,
investment advice and slasher films, well, what is a comparison. Well,
you're the victim. Public spend the victim again and again
and again. And I'm gonna go back in time and
(01:22):
you know, the decades that I've been in this business
and watched how it's changed over the years. Originally started out,
it was a brokerage brokerage model. It was a brokerage
model where it was you know, commission based, the old
churnam and burn him and and you know, kind of
(01:45):
what we were taught back in the day was to
build positions and certain companies and then you know, unload
them all at a certain time. It was it was again,
it was all so the winner was obviously the brokerage firm,
and it was something that was distasteful, something I didn't
(02:07):
like doing. And this weekend on the radio show, I'll
go back and tell some stories from that point in time.
We broke away from that. We broke away from that
from a myriad of different reasons, started Markowski Investments and
started doing things very very differently. What they had after
that period of time. What we engaged in was what
(02:30):
was called this is kind of like pre Ia, was
called wrap accounts, where they still wanted you to put
high commission products in these wrap accounts, but you would
charge a fee for everything that was in that account.
We didn't charge commissions based upon what was going in there. However, However,
(02:52):
this was kind of pre ETF days and they still
had a lot of the mutual funds that were out
there now for what you go back in time, so
if you can remember this, there were different classes of
mutual funds. There was Class A, there was Class B,
and then there was Class C and sometimes you'd be
able to get into institutional funds which charged a much
(03:15):
lighter load for the overall customer. It was interesting because
class A funds they would charge you a commission upfront,
the Class B funds would charge you a commission when
you sold, and the class C funds would charge you
an ongoing commission, you know, and all the other little
hidden fees and cost there as well. But we discovered
(03:37):
we figured something out with the Class B funds again
because they were they were supposed to be bad because
you were selling afterbody made money. We figured out that
there's a little caveat in the rules that if you
sold ten percent ten percent on you had a regular intervals,
you didn't have to pay anything. So this is how
(03:57):
we helped our clients avoid a ton of fees and commissions.
And then eventually it moved on to the registered investment
advisory model, which is used today. It's basically what is
being used all across the country. Again, you're more under
the guise of the Securities and Exchange Commission, and well,
(04:24):
what's going to happen next with this? And again this
is where I'm getting back into where investors are going
to get caught up and slashed because I'm seeing it
every single day. I could, I could be done today
if I wanted. This is I'm being upfront and honest
with everybody, my brothers and I and you know, thank God,
(04:48):
you know we've been blessed. We have, we worked our
tail off, but you know what, there's no doubt about
it that we have been blessed with with good fortune,
this radio show, the podcast, everything that we've done and
what we've been able to build, I can we can
cash out today. Today I get a myriad of emails
(05:14):
and phone calls and proposals from private equity companies all
over the country. Uh, you know, asking us to sell.
And what they're asking what they're they're asking for is
a quite frankly, it's a ridiculous multiple, an absolutely ridiculous multiple,
(05:39):
meaning that I would be selling at a ridiculous it's
too expensive, too expensive now again, I'm I'm not selling
a restaurant here. Okay, I'm not saying I don't. I
don't own a restaurant. Where if somebody, you know, sell
a restaurant, a guy buys it at a ridiculous price
(06:01):
and it goes under Okay, you know, the client tele
may be upset. They've got to go somewhere else. This
is a profession. This is a profession. You GE's certain
it is what it is. It's just you know what
we do. What accountants do, what the lawyers do. We
I have of a duty to my clients. Now, if
(06:25):
I were to Steve Miller is saying take the money
and run, okay, and sell at an absolutely ridiculous multiple.
I know what's going to happen next. I know what's
going to happen next. I know that because of the
ridiculous multiple, uh, the people buying this, the private equity
(06:47):
company has to get some sort of ridiculous bang for
the buck. So they're going to have to find some
way to generate ridiculous commissions and fees off of our
client base. I know what they're going to do. They're
going to start pushing everyone into high commission annuity products,
(07:08):
or they're going to be pushing them into the latest
and greatest alternative funds and other private equity products, basically
wreckon my clients. Now again, legally, I sold it. I'm
no longer responsible. I'm no longer responsible. Yeah right, legally,
(07:30):
I'm not responsible morally ethically, damn straight, damn straight, we're responsible.
I I'm basically warning everybody out there right now. Again.
You may love your advisor, might have been a great guy,
(07:56):
and you know, I get it. I mean, right now,
dollars are being waived in front of advisors all around
the country to sell, to get out, to retire, and
I know what's going to happen next. I know what's
going to happen next. We we've talked about this demonic
(08:20):
game of musical chairs that's taken place with these private
equity companies. It's not going to end well. It's not
going to end well. You know again, I'll give another example.
I told the example the gentleman sold as H fat
company for I mean the close of thirty million dollars. Okay,
(08:43):
and again he may have a lot of clients that
rely on his H fat company, but you know what,
all the respect it's an h fat company. Somebody comes
and they do a poor job and working on your
air condition. You get somebody new. This is not your
your life savings, is not your portfolio, This is not
your proverbial nest egg by any stretch of the imagication.
(09:04):
It's different. This is a different business. And I'm just
warning everybody out there. Your advisor approaches you, approaches you
and tells you you know, you know, I'm getting that
a little long in the tooth, and we're looking to retire,
and I'm looking to sell who he is selling to?
(09:27):
Who's buying this firm? And if he he alludes, And
then you got to ask is it a private equity concern?
Is it a private equity company? Run? Run? Or try
to talk him out of it, or have him listen
to this podcast because they're alternatives. Do we help advisors
(09:56):
retire over time and end up taking over their business? Absolute? Absolutely,
But again, you know we're doing it at a normal valuation.
What what's going to happen? Quite frankly, it's going to
be like a slasher film and the average investor is
(10:16):
going to get cut up. Watchdog on Wall Street dot Com.
Hm
The Watchdog on Wall Street podcast explaining the news coming
out of the complex worlds of finance, economics, and politics
and the impact it we'll have on everyday Americans. Author,
investment banker, consumer advocate, analyst and trader Chris Markowski.
Speaker 2 (00:16):
Investment advice and slasher films comparison between the two, anyway,
She looked it up. The original Halloween with Mike Myers
that came out in nineteen seventy eight. There's been thirteen
Halloween films. You want to go to Friday the thirteenth
there with Jason Vorghez. I think it's been about eleven
(00:39):
of those films as well. And it's kind of funny
because basically the same thing over and over again, you know,
slashing people, people doing dumb things. What was it that
recent commercial on TV where the kids are getting chased
by a slasher and they go hide in a h
(01:02):
they go hide in the garage filled with chainsaws. Anyway, unfortunately,
investment advice and slasher films, well, what is a comparison. Well,
you're the victim. Public spend the victim again and again
and again. And I'm gonna go back in time and
(01:22):
you know, the decades that I've been in this business
and watched how it's changed over the years. Originally started out,
it was a brokerage brokerage model. It was a brokerage
model where it was you know, commission based, the old
churnam and burn him and and you know, kind of
(01:45):
what we were taught back in the day was to
build positions and certain companies and then you know, unload
them all at a certain time. It was it was again,
it was all so the winner was obviously the brokerage firm,
and it was something that was distasteful, something I didn't
(02:07):
like doing. And this weekend on the radio show, I'll
go back and tell some stories from that point in time.
We broke away from that. We broke away from that
from a myriad of different reasons, started Markowski Investments and
started doing things very very differently. What they had after
that period of time. What we engaged in was what
(02:30):
was called this is kind of like pre Ia, was
called wrap accounts, where they still wanted you to put
high commission products in these wrap accounts, but you would
charge a fee for everything that was in that account.
We didn't charge commissions based upon what was going in there. However, However,
(02:52):
this was kind of pre ETF days and they still
had a lot of the mutual funds that were out
there now for what you go back in time, so
if you can remember this, there were different classes of
mutual funds. There was Class A, there was Class B,
and then there was Class C and sometimes you'd be
able to get into institutional funds which charged a much
(03:15):
lighter load for the overall customer. It was interesting because
class A funds they would charge you a commission upfront,
the Class B funds would charge you a commission when
you sold, and the class C funds would charge you
an ongoing commission, you know, and all the other little
hidden fees and cost there as well. But we discovered
(03:37):
we figured something out with the Class B funds again
because they were they were supposed to be bad because
you were selling afterbody made money. We figured out that
there's a little caveat in the rules that if you
sold ten percent ten percent on you had a regular intervals,
you didn't have to pay anything. So this is how
(03:57):
we helped our clients avoid a ton of fees and commissions.
And then eventually it moved on to the registered investment
advisory model, which is used today. It's basically what is
being used all across the country. Again, you're more under
the guise of the Securities and Exchange Commission, and well,
(04:24):
what's going to happen next with this? And again this
is where I'm getting back into where investors are going
to get caught up and slashed because I'm seeing it
every single day. I could, I could be done today
if I wanted. This is I'm being upfront and honest
with everybody, my brothers and I and you know, thank God,
(04:48):
you know we've been blessed. We have, we worked our
tail off, but you know what, there's no doubt about
it that we have been blessed with with good fortune,
this radio show, the podcast, everything that we've done and
what we've been able to build, I can we can
cash out today. Today I get a myriad of emails
(05:14):
and phone calls and proposals from private equity companies all
over the country. Uh, you know, asking us to sell.
And what they're asking what they're they're asking for is
a quite frankly, it's a ridiculous multiple, an absolutely ridiculous multiple,
(05:39):
meaning that I would be selling at a ridiculous it's
too expensive, too expensive now again, I'm I'm not selling
a restaurant here. Okay, I'm not saying I don't. I
don't own a restaurant. Where if somebody, you know, sell
a restaurant, a guy buys it at a ridiculous price
(06:01):
and it goes under Okay, you know, the client tele
may be upset. They've got to go somewhere else. This
is a profession. This is a profession. You GE's certain
it is what it is. It's just you know what
we do. What accountants do, what the lawyers do. We
I have of a duty to my clients. Now, if
(06:25):
I were to Steve Miller is saying take the money
and run, okay, and sell at an absolutely ridiculous multiple.
I know what's going to happen next. I know what's
going to happen next. I know that because of the
ridiculous multiple, uh, the people buying this, the private equity
(06:47):
company has to get some sort of ridiculous bang for
the buck. So they're going to have to find some
way to generate ridiculous commissions and fees off of our
client base. I know what they're going to do. They're
going to start pushing everyone into high commission annuity products,
(07:08):
or they're going to be pushing them into the latest
and greatest alternative funds and other private equity products, basically
wreckon my clients. Now again, legally, I sold it. I'm
no longer responsible. I'm no longer responsible. Yeah right, legally,
(07:30):
I'm not responsible morally ethically, damn straight, damn straight, we're responsible.
I I'm basically warning everybody out there right now. Again.
You may love your advisor, might have been a great guy,
(07:56):
and you know, I get it. I mean, right now,
dollars are being waived in front of advisors all around
the country to sell, to get out, to retire, and
I know what's going to happen next. I know what's
going to happen next. We we've talked about this demonic
(08:20):
game of musical chairs that's taken place with these private
equity companies. It's not going to end well. It's not
going to end well. You know again, I'll give another example.
I told the example the gentleman sold as H fat
company for I mean the close of thirty million dollars. Okay,
(08:43):
and again he may have a lot of clients that
rely on his H fat company, but you know what,
all the respect it's an h fat company. Somebody comes
and they do a poor job and working on your
air condition. You get somebody new. This is not your
your life savings, is not your portfolio, This is not
your proverbial nest egg by any stretch of the imagication.
(09:04):
It's different. This is a different business. And I'm just
warning everybody out there. Your advisor approaches you, approaches you
and tells you you know, you know, I'm getting that
a little long in the tooth, and we're looking to retire,
and I'm looking to sell who he is selling to?
(09:27):
Who's buying this firm? And if he he alludes, And
then you got to ask is it a private equity concern?
Is it a private equity company? Run? Run? Or try
to talk him out of it, or have him listen
to this podcast because they're alternatives. Do we help advisors
(09:56):
retire over time and end up taking over their business? Absolute? Absolutely,
But again, you know we're doing it at a normal valuation.
What what's going to happen? Quite frankly, it's going to
be like a slasher film and the average investor is
(10:16):
going to get cut up. Watchdog on Wall Street dot Com.
Hm
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