Whiskey Tango Foxtrot
The military alphabet, officially known as the NATO phonetic alphabet, has a rich history rooted in the need for clear and unambiguous communication. Its origins trace back to the early 20th century, when radio communication became vital in military operations. Early phonetic alphabets varied between countries and military services, often leading to confusion.
During World War I and II, different versions were used by the British and American forces. The U.S. Army used the “Able-Baker” system, while the Royal Air Force had its own version. These systems helped reduce errors in transmitting critical information, especially over noisy or unreliable communication channels. But in 1956, the International Civil Aviation Organization (ICAO), in collaboration with NATO and other international bodies, standardized the current version of the phonetic alphabet. This version was designed to be intelligible and pronounceable by speakers of many languages. It includes familiar terms like “Alpha” for A, “Bravo” for B, and “Charlie” for C.
The NATO phonetic alphabet is now used globally in military, aviation, maritime, and emergency services. Its clarity and consistency make it indispensable for spelling out names, coordinates, and other vital data. Beyond its military roots, the alphabet has found its way into civilian life, from customer service to amateur radio. Its enduring utility underscores the importance of clear communication in high-stakes environments.
But it has also become an exclamation of exacerbation in my business!
I say “W-T-F” when I see the types of risk assets some other “advisors” put into their clients’ accounts. Clients are supposed to have a clear Investment Objective (IO) and a documented Risk Profile that the Advisor should use when constructing a portfolio for the client. But all too often these are ignored, and the clients are exposed to illiquid or volatile risk assets and take market risks to which they never intended to be exposed.
How do I know this? Because as I now enter my 40th year on Wall Street, I have seen all too many of these scenarios from unscrupulous characters that can give my industry a bad name. But as I help my clients understand and clean up what has previously happened to their portfolios, we form a better partnership at Double Eagle Partners.
First a little history. Prior to all Wall Street brokerage firms dropping commissions to zero about a decade ago, all stockbrokers charged a per share commission on equity trades or a net mark-up on bond trades in order to make revenue. When commissions went to zero and bond trading became electronic, these stockbrokers had to come up with other ways to generate revenue. Hence, they all became “Financial Advisors” instead of stockbrokers so that they could charge fees on the assets under management. But many could not survive as financial advisors and still wanted to sell commissionable products to their clients. In the industry this is called the “hybrid”
advisor as it allows Advisors to charge management fees of 1-2% on assets under management (AUM) in the client’s managed accounts, while having separate and redundant client brokerage accounts to which s/he sells commission products such as annuities and structured notes as a stockbroker. Possibly unbeknownst or unclear to the client.
The following are actual stories from some of my clients, but their names will be withheld to protect the innocent.
- A 91-year-old widow with a $2 million dollar portfolio had an official Investment Objective of “Aggressive Growth” pegged to her account. The “advisor” (small “a”) was actually a stockbroker who charged commissions, putting fully one-quarter of her portfolio in an expensive tech mutual fund that he got paid a commission to sell to her. Granted it performed well over the last couple of years, but that is not the point. This widow needed income for assisted living and nursing care; growth tech stocks don’t pay dividends, nor do they generate income.
- A wealthy doctor client of mine who is approaching retirement had an “Advisor” (capital “A”) that was also a stockbroker This client was sold hedge funds, private credit and interval funds, all of which had large commissions associated with them and are virtually impossible to get out of once purchased. Reminds me of the “Hotel California” … you can check out anytime you want but you can never leave. Especially bothersome when you are starting to plan for your retirement.
- A 78-year-old client had an “advisor” (small “a” means he was actually a stockbroker, but my client was unaware) who owned numerous Structured Notes, which look like bonds but act like stocks and the only people that make money on these investments are the underwriters and stockbrokers. The products have complicated names like “Trigger Notes” and “Dual Directional Trigger Jump Securities” or “Dual Directional Buffered Performance Leveraged Upside Securities”. The client had no idea what he owned. These were illiquid investments tied to various single stocks or market indices that paid zero interest nor dividends. They are difficult to sell should you need the money prior to maturity, and the entire investment is at risk of going to zero if the market corrects a mere 10%. Hardly a smart holding for a retiree.
I could go on and on, but it only makes me want to say “W.T.F.” some more and I think my readers get the point. Your Investment Advisor should be your partner on your journey towards accumulating and protecting your wealth. A partner like Double Eagle Partners. Give me a call if you would like me to look inside your portfolio and show you what you actually own. It may make you say “W-T-F”.
