I always hear about how salespeople and traders often shaft their clients, but the question, why do clients keep coming back for more? Also, how often is it that a trader or salesperson throws a bunch of exposure onto a client fully knowing that the client is likely to get fucked? After reading about Goldman front-running clients, the tradition of blowing up clients in Liar's Poker, and the deception that MS pulled in Fiasco, I'm staying the hell away from brokers when it comes to my personal wealth.
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The people who use brokers usually don't have much of an alternative. They are really big trades dealing with more money then most people have. It's not like you can use Etrade to make a big block trade
Sales generally gives good advice and you're looking at a very distorted view. Sales basically gets paid on the volume of trades they bring in. It's in their interest to protect the client and keep them coming back.
Liar's Poker is a great book, but a real life trading floor is not like Liar's Poker. Things have changed sinced then.
Also keep in mind that the end investor and the trading desk have different investment objectives. The trading desk needs to mark their assets daily and is under pressure to keep assets off their balance sheet. An end investor may not need to mark their assets daily, and is more interested in the long-term performance. So, even if the desk expects the price on the asset to drop tomorrow, the sales person might still sell it, knowing that the price will probably increase the next week. Win-win for both sides.
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