Daria and I both started our careers as stock brokers. But times have changed since I took the New York Stock Exchange exam in 1971. There are many more products for brokers/financial planners to sell and much more pressure to sell them -- lots of them.

With a combined 40 years in the financial services business, Daria and I have seen just about all the tricks of the trade (excuse the pun!) and we're about to reveal them. In addition to our own experience, we talked to a number of brokers with the promise of anonymity. Believe me, you won't find this information anywhere else! Here are investment pitches that should trigger your suspicion:

"In-house" products and mutual funds. We are not fans of in-house products for three reasons: 1.) a broker may get a higher percentage of the commission for selling you one of these products; 2.) many of these funds underperform similar "non-brokerage" funds; and 3.) if you decide to transfer your account to another brokerage firm ... too bad ... the new firm generally won't accept a competitor's "in-house" funds. You'll be forced to either leave the mutual fund(s) at a firm you no longer want to do business with, or sell the funds right then and there. Two bad alternatives!

Straight Talk Tip: Your investment objectives may best be served by being in more than one family of funds. But, I just want you to realize that you can save 1%, 2% or more by staying in one family of funds. Something called "rights of accumulation" allows a commission break when you invest large amounts in one fund family. Has your broker ever mentioned this to you? (Let me guess!)

No-commission "deals." Your broker breathlessly calls with an exciting stock tip that you can buy "without a commission." A golden opportunity? Unlikely.

You're probably being pitched a security owned by the brokerage firm. Does that mean it's a bad stock? Not automatically ... but it does mean the broker is receiving a "commission credit" to sell if to you. Plus, the firm may mark up the price to make up for the higher commission they pay the broker. Some deal! If you're interested in the "no commission" investment, call another firm or two and compare costs.

Page 1 2 Next »