Almost 25 years ago, I wrote a booklet called “Two Out of Three Ain’t Bad.” I had just left a brokerage firm where I became the chief financial officer fresh out of graduate school. I thought I understood everything about the financial world, at least in theory. Putting that knowledge into practice was a different story.

I have never been a stock broker, but I remember how things were back in the “good old days.” The date might be different today, but not much else is. That’s why you still need to be on your guard.

“Two out of three ain’t bad” was inside jargon at most firms. It meant that regardless of how clients’ investments performed, the firm and the broker made money. Essentially, the client was the big fat cow waiting to be milked.

As the phrase suggests, two out of three parties made money. Unfortunately, the client was the one who missed out.

It was a business. And it wasn’t a pretty business.

Commissions on trades back then could be as high as 5% of the value of the trade in and out. On a $100,000 trade, the broker stood to make close to $10,000 if he wanted to go full bore on you. Most would charge you “only” 2.5% or 3%.

I saw the results. I used to cut the checks. My top broker in the late ’80s was making between $50,000 and $70,000 in commissions every month! The guys way down on the totem pole were taking in around $5,000.

Today, you have commissions as low as $0 at places like Robinhood, but there are still a lot of brokers out there. According to the New York State Comptroller’s office, the average Wall Street salary is $422,500. That money is coming from somewhere, and you can bet that you’re a good part of that “somewhere.”

Now, the salaries on Wall Street come from a variety of sources, not just retail consumers. You’ve got investment banking, wholesale clients, trading profits, banking profits, custodial services and a myriad of other products and services. But there are still a lot of full-service brokers, and they are still making a bundle off you in two ways.

The first is through wrap accounts. These are accounts where you pay a flat fee on the percentage of your assets under management. For example, if you have $100,000 with your broker, they take $1,000 a year. In return, you normally get a fair number of trades “free” of charge, along with other money management services. If the broker is actively managing your account and not just putting you in a bunch of funds, you may pay a little more.

The wrap accounts don’t bother me much. They can be a good deal. What bothers me – and what you should be on the lookout for – are the commissions you don’t see. These are often disguised.

These products have several features, and most of them are not in your favor. The products that scare me the most are the ones that contain the words “structured,” “life insurance” or “indexed annuities.” They are all investments that offer a guarantee of principal and a low-percent minimum payout. They also present you with an upside in cases where the money invested mimics an index.

The problem is you can’t sell the product before it expires without facing a serious penalty. Some have five-year terms, and others have even longer terms at higher costs. As length increases, so do penalties for early withdrawal.

These penalties are the commissions your broker received up front from selling you the product. Those commissions can be as high as 10% – the maximum commission that brokers could charge back in the ’80s and ’90s for a round-trip trade. These commissions are not transparent.

You are told that “all” of your money goes to work for you on day one – but try withdrawing that money before the term expires and you’ll run into early surrender fees. If you inspect more closely, you’ll see that those surrender fees are the commissions paid out to the broker who sold the investment to you.

The bottom line is that you must do your homework before dealing with this type of middleman. You need to understand that their interests may not be aligned with yours and plan accordingly, especially when your hard-earned retirement money is at risk.

Good investing,