Can You Trust Your Broker?

As a young, eager stockbroker in West Barnstable, Mass., in the mid-1980s, Caleb T. Warren spent hours charting companies' performance on yellow pads to find the best picks for his clients. One day, as he sat at his desk at Prudential-Bache Securities Inc., a manager grabbed a pencil out of Warren's hands and broke it. "That's for our research department," the manager barked before stalking off. "Your job is to sell."

Warren tried to take it in stride. But after stints at two other national brokerages, he just couldn't put up with the firms' unrelenting pressure to produce commissions, even though the investments often didn't benefit customers. In 1991, he formed his own money-management firm. He no longer collects commissions, instead charging his 70 clients a flat management fee. "I'm getting paid to make money for my clients, not to sell a product," he says.