Wedbush Securities Review

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An investment advisor firm, brokerage and investment bank, Wedbush Securities is a one-stop financial shop. Headquartered in Los Angeles, the firm has 12 more offices in California and 12 more scattered from Honolulu, Hawaii to Traverse City, Michigan -- plus more than 100 correspondent offices. Its roots go back to 1955, and until 2018, one of its co-founders, Edward Wedbush, still led the firm. Currently, one of his sons serves as president. 

Working in the financial services industry for over half a century, the firm often appears on top lists for stock picking. Recently, the 2019 StarMine Analyst Awards named members of Wedbush Securities’ equity research team as No. 1 top earning estimators (in the overall analyst award category), No. 1 in thrifts & mortgage finance (in the industry analyst award category), No. 1 in software (in the industry analyst award category) and other distinctions. 

Wedbush Securities Background

With $5,000, Edward Wedbush and Robert Werner founded Wedbush & Company as a mutual fund brokerage in 1955. It has since grown (and changed names) into a full-service financial firm.

Even though Wedbush Securities has been around for decades, it’s also been at the forefront of cryptocurrency banking. In 2014, it became the first U.S. financial institution to accept Bitcoin payments. 

Recently, however, the firm has run into some headwinds, including from the U.S. Securities and Exchange Commission (SEC). Indeed, the Los Angeles Times described the company that’s been accused of a number of irregularities as “troubled.” In May 2018, co-founder Wedbush stepped down, and his sons Gary Wedbush and Richard Jablonski took over as co-presidents. 

Wedbush Securities Client Types and Minimum Account Sizes

The asset management division works with institutional and private investors. The latter category includes individuals above and below the high-net-worth threshold. 

To open an investment management account, the minimum is typically $100,000, though an advisor may request that an exception be made. For discretionary accounts on the independent contractor platform, the minimum is $25,000, and for Strategist Advisory accounts (a wrap-fee program that invests only in mutual funds and exchange-traded funds), the minimum is $10,000.

Services Offered by Wedbush Securities

As mentioned earlier, Wedbush Securities is a full-service financial firm. Within its wealth management division, it offers financial planning, investment solutions, retirement planning and lending and checking bank solutions. Advisors can offer guidance on such investments as mutual funds, exchange-traded funds (ETFs), unit investment trusts (UITs), stocks, bonds and alternative investments - plus annuities and other insurance products.

Additionally, Wedbush Securities offers four different wrap fee programs (where most, but possibly not all, transaction and management costs are bundled into one fee): 

1. Managed Account Program 
2. Discretionary Advisory Account Program 
3. Non-Discretionary Advisory Account Program 
4. Strategist Advisory Account Program 

In turn, each program has different kinds of accounts:

1. Managed Account Program  

• Managed Model Account (MMA)  
• Separately Managed Account (SMA)  
• Unified Managed Account (UMA)  
• Independent Manager Account (IMA)  
• Other Wrap Program Arrangements 

2. Discretionary Advisory Account Program  

• Discretionary Managed Assets (DMA)  
• Discretionary Managed Account – Independent Contractor (DMI-IC) 

3. Non-Discretionary Advisory Account Program  

• Self-Directed Investment Advisory Account (SDI)  
• Self-Directed Investment Advisory Account – Independent Contractor (SDI-IC) 

4. Strategist Advisory Account Program (MF/ETF)  

• Portfolios constructed of mutual funds and/or ETFs provided by independent or affiliated advisor firms

Wedbush Securities Investment Philosophy

Investing strategies and methods of analysis depend on the financial advisor, but generally, the former category includes both long-term and short-term purchases of securities. 

In general, advisors will buy and sell securities based on the client's investment objective, risk tolerance, liquidity needs and time horizon. 

Fees Under Wedbush Securities

Wedbush Securities bases its investment advisory fees on a percentage of client assets under management (AUM). The firm may negotiate the fee, but generally, the wrap-fee programs follow this fee schedule (except for the Strategist Advisory Account Program):

For the Strategist Advisory Account Program, which has a lower minimum requirement, the fee schedule is:

What to Watch Out For

Wedbush Securities has 130 disclosures of legal and regulatory issues in its latest SEC filing. The largest fine was $2,447,043.38 for an action brought by the SEC in 2014, in which it alleged that the firm, among other things, did not provide oversight of sponsored access trading platforms that met regulatory requirements, failed to file reports of suspicious trading activity in connection with its market access business and allowed sponsored access clients to submit short-sale orders for securities that were not easy to borrow without first otherwise locating shares to borrow. 

In 2019, the firm paid a $2,434,536 fine on top of $5,674,713 in restitution and prejudgement interest after the SEC alleged Wedbush adhered to improper practices involving pre-released American depository receipts. 

As a broker-dealer, Wedbush Securities receives shareholder distribution fees from mutual fund companies that charge 12b-1 fees (named for Rule 12b-1 of the Investment Company Act of 1940). This could present a conflict of interest, as advisors have a financial incentive to recommend to clients funds that charge higher 12b-1 fees (which are assessed as a percentage of assets). That said, Wedbush Securities says it rebates these fees to clients who are being charged an advisory fee, so if you may be affected, make sure your account is being credited for these 12b-1 fees.

Additionally, depending on how frequently your account has transactions, you may be better off paying for each trade rather than participating in a wrap fee program. Before signing onto a wrap fee program, ask your advisor, who, as a fiduciary, must put your interests first, if the wrap fee program is really right for you. 

Also, while the firm’s financial advisors are fee-based, some may also be insurance agents or broker representatives who receive commissions in their separate capacities.

Opening an Account With Wedbush Securities

To contact Wedbush Securities, call (213) 688-8000 or send a direct message via its contact-us page: https://www.wedbush.com/contact-us/.

All information was accurate as of the writing of this article. 

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