Wirehouse vs Independent Broker dealer

To understand either of the terms, you must know what a broker-dealer is. A broker-dealer is a financial advisor who acts in a dual manner i.e. both as a broker (buying or selling securities on someone else’s behalf) and a dealer (buying or selling securities for themselves, acting as a principle).

Wirehouses:

Wirehouse is a term used for a huge firm that offers financial research and advice to clients. These firms usually have multiple branches and sometimes operate internationally too. They range from small regional brokerages to giant institutions. People working for Wirehouse firms are registered agents who sell products for the firm. They’re given limited options to sell and are not allowed to sell anything other than what the firm offers. If you decide to start your career as a broker-dealer with a Wirehouse firm:

• You don’t need a starting capital
• You will be an employee
• The business you bring to the firm belongs to the firm, you can’t have the clients.
• You follow the firm’s business model
• You use the firm’s office premises
• You will have a limited payout
• You can have multiple conflicts of interest with the firm
• Your reputation is conjoined with that of the firm.

Independent broker-dealer:

In the case of an independent broker-dealer firm, agents working for the firm have the liberty to offer a wide range of products and aren’t restricted to certain products. If you decide to start your own broker-dealer firm, you would have to get it registered with FINRA by filing a form BD. Then you must register yourself with a SRO (self-regulatory organization). You must register yourself with the state (some states require you to register separately). Then you must start hiring experienced employees for your firm.

An independent broker-dealer:

• You need a starting capital of $100,000 to $200,000
• You own the business
• The business you get is yours, clients are yours and you can even pass them on for good money.
• You make your own business model according to your operations
• You decide where your office will be and how it operates.
• Your profit is all yours and your loses are also yours
• You are your own boss so no conflict of interest, there is no unnecessary bureaucracy.
• You make a name for yourself i.e. build your own credibility.

Broker-dealer consulting:

Starting your own broker-dealer is not a whimsical task that you can just accomplish. There is a series of long, painstaking steps that you must cover before starting a firm. In independent broker-dealer, profits are unlimited and so are the risks. Hence, you must get a professional consultation before making a final decision. Professional broker dealer consulting services will also help you use your capital wisely; some even complete all the form filling and registrations for you. If you plan on starting your own firm in GA, BD consulting Associates can guide you about all the basic framework required and will even file all the paperwork for you. Their staff is highly experienced and professional and they offer the best customer service.