The goal of a stockbroker was to get customers to either buy and/or sell shares of stocks in a particular company they recommended. The more transactions that occurred, the more money the advisor made. This was a very transactional environment. It could often lead to the unethical practice of a broker “churning” the account.
Churning is the excessive trading in a client’s account to increase commissions. (Readmore) The commission-based model, while I am not discounting as a viable option for some clients’ accounts, may not always focus the advisor on what was best for the client in the long term but on the next transaction.
In this approach, as your account increased in value, the financial professional’s compensation also increased. In essence, your success was linked to the advisor’s pay. In that situation, there is incentive for your advisor to more closely manage your account.
Even if they wanted to back out, there would be some costs associated with that. Nothing comes without a price. In a fee-based system, you know up front what your costs are, what you are paying for, and when the costs are incurred.