Sense on Cents

“We’re in the moving business, not the storage business!!”

If I had a nickel for the number of times I heard that line on Wall Street, I’d have a lot of nickels. That statement would coarse across many trading floors to push salespeople to sell, sell, sell and sell some more.

The sales process on Wall Street is not supposed to be the ‘boiler-room’ operations as so often depicted in films and books. Wall Street sales is not supposed to be a mere “dialing for dollars.” Prior to engaging prospective clients, salespeople and sales managers are obligated to address certain requirements. What may they be? The two primary requirements are:

1. KYC, an abbreviation for “know your customer.” This requirement addresses the need to fully understand the client’s business, its source of funds, its investment objectives, and much more. This requirement is extremely important, but regrettably often not fulfilled. Instead of “KYC,” many salespeople and sales managers view customers more from the standpoint of “he has money, I like him.” Given that shortsighted view, Wall Street often violates the second cardinal rule of sales.

2. Suitability addresses the requirement that an investment product meets the objectives of the customer. Interpreting this requirement is not as easy as some may believe. Where is the line drawn? What product may fit? What products definitely do not fit? All too often, the topic of suitability is addressed after the fact rather than prior to sale. Why does this happen? (more…)