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People who get paid a commission to sell you X are motivated to sell you X. Preferably the biggest X possible. As opposed to determining whether X is best for y
by wikwocket 13y ago
People who get paid a commission to sell you X are motivated to sell you X. Preferably the biggest X possible. As opposed to determining whether X is best for you or even remotely applicable for your situation.
For example, there's a saying about whole life insurance policies, that they are not bought, but sold. Meaning that no one goes looking to buy them (because they often perform poorly compared to traditional investments), but agents will often push them on people (due to high commissions). Note that the high commission rate is not unrelated to poor performance as an investment!
- coryl 13y agoThat would simply depend on how sleazy the individual or business in question then, right? I don't see commission as the biggest factor of importance when deciding investment vehicles. Your family doctor may get commission on prescription drugs prescribed to you, but that doesn't necessarily mean your doctor is unethical or only self-motivated.
- kalid 13y agoIncentives drive behavior (not 100%, but hugely influenced). When real estate agents are incented to sell,your house quickly (vs. at the highest price possible)... they sell your house quickly, and not the highest price possible. For their own houses, they of course go for the highest price. http://freakonomics.com/2008/02/26/real-estate-agents-revisited/ http://freakonomics.com/2008/02/26/real-estate-agents-revisi...