Financial Services

The leading investment counsel firms make no claim to being brilliant; they do pride themselves on being careful, conservative, and competent. Their primary aim is to conserve the principal value over the years and produce a conservatively acceptable rate of income. Any accomplishment beyond that-and they do strive to better the goal-they regard in the nature of extra service rendered. Perhaps their chief value to their clients lies in shielding them from costly mistakes. They offer as much as the defensive investor has the right to expect from any counselor serving the general public.

What we have said about the well established investmentcounsel firms applies generally to the trust and advisory services of the larger banks.*

Financial Services

The so called financial services are organizations that send out uniform bulletins (sometimes in the form of telegrams) to their subscribers. The subjects covered may include the state and prospects of business, the behavior and prospect of the securities markets, and information and advice regarding individual issues.

There is often an “inquiry department” which will answer questons affecting an individual subscriber. The cost of the service averages much less than the fee that investment counselors charge their individual clients. Some organizations-notably Babson’s and Standard & Poor’s-operate on separate levels as a financial service and as investment counsel. (Incidentally, other organizaThe Investor and His Advisers

• The character of investment counseling firms and trust banks has not

changed, but today they generally do not offer their services to investors with less than $1 million in financial assets; in some cases, $5 million or more is required. Today thousands of independent financial planning firms perform very similar functions, although (as analyst Robert Veres puts it) the mutual fund has replaced blue chip stocks as the investment of choice and diversification has replaced “quality” as the standard of safety.tions-such as Scudder, Stevens & Clark-operate separately as investment counsel and as one or more investment funds.) The financial services direct themselves, on the whole, to a quite different segment of the public than do the investment counsel firms. The latters’ clients generally wish to be relieved of bother and the need for making decisions. The financial services offer information and guidance to those who are directing their own financial affairs or are themselves advising others. Many of these services confine themselves exclusively, or nearly so, to forecasting market movements by various “technical” methods. We shall dismiss these with the observation that their work does not concern “investors” as the term is used in this article.