In an earlier era in the money-management business, the second half of December was accompanied by the arrival at the O’Brien Greene & Company offices of wheels of cheese, cartons of delicacies, bottles of liquor, cases of wine, barrels of popcorn, umbrellas, rain hats, and such, sent by brokerage firms to show their appreciation for stock and bond transactions during the year just ending, and their hope for more in the year about to begin.
But with the lowering of brokerage commissions over the past 25 years, those firms have gradually found such lavishness uneconomical, to the point where today our seasonal take consists of a single box of chocolate-coated pretzels. O tempes, o mores!
What does this say about the money-management business? The cost of making changes in client portfolios have dropped dramatically over the years to the point where the costs of buying and selling shares of stock are practically immaterial.
Is this a good thing? It is for clients, because they pay for the brokerage. It is not for brokerage firms. It complicated their business. They have had to shift their business away from the buying and selling of individual stocks and bonds to the buying and selling of mutual funds. Insofar as these tend to have arcane classes of ownership, each with a different fee next to impossible to figure out, brokerages have made up the slack elsewhere, and then some.
But not with us. We don’t use mutual funds. That’s why the brokerages no longer send us wheels of cheese and umbrellas and the rest of it.