Wirehouse Broker

  

Categories: Banking, Tech

See: Wirehouse.

Take yourself back...wide dissolve...to a time when we had to wire each other through telegraph copper wires. Yes, not only is that pre-smartphone, but also pre-phone, pre-internet, pre-lots-of-things-we-take-for-granted-today.

Okay, you can come back to today now. A wirehouse broker is a broker who works for a wirehouse firm, which is just a brokerage firm that has branches. Because branches used to have to communicate with each other via telegraph wires, they used to be called (and still are sometimes) “wirehouse firms." Talk about old school.

These big'uns are traditionally full-service brokerages, which mean they offer research, investment advice, ordering, and execution of trades. The full gamut, if you will. You might have heard of some of the biggest wirehouse firms, like Wells Fargo, UBS, and Morgan Stanley.

Independent brokers used to have a hard time being taken seriously. If you weren’t with one of the big boys, people were afraid you didn’t know what you were doing, or that you didn’t know what you were doing on purpose (a fraudster). But the financial crisis of ‘07-’08 changed the fact that Wirehouse firms were all tangled up in those nasty, wrongly-rated mortgage-backed securities. They were tangled up so much that some of them (like Merrill Lynch) straight up disappeared like a coin in David Blaine’s hand. Whoosh, gone forever.

This opened up the financial field as wirehouse brokers jumped from their sinking wirehouse ships—er, firms—and looked for new ways to keep doing their thang, without the risk of being involved with those big'uns who messed up big time.

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