As Wedbush Securities downsizes its headquarters in a move to Pasadena, the financial advisory firm is focused on expanding its global reach and streamlining its services and platform through considerable investment in technology.
Over the last few years, Wedbush has been making “a very sizable investment in several areas of technology,” as well as hiring more software engineers and project managers, Chief Executive Gary Wedbush said.
One area of focus is building a “state-of-the-art workstation” for Wedbush’s financial advisers.
While Wedbush has three primary businesses – wealth management, capital markets and clearing – Wedbush said the clearing business is the largest in terms of revenue and profitability and offers the opportunity for the company to sell its own software. Through its clearing services, Wedbush assists other broker dealers and registered investment advisers in facilitating financial transactions.
“That’s another channel for us to sell the technology – that we build for our own advisers and our own people – to other small broker dealers,” Wedbush said. “More and more over the years, we’ve become a firm that actually sells technology and processing alongside traditional advice.”
In addition to investing in improved graphical user interfaces to attract clients to the company’s platform, Wedbush is looking to drive efficiency through automation to not only cut costs of doing business but also improve accuracy and decrease errors.
“That kind of stuff is hidden in the background, but it’s as important, if not more, in really driving the quality of the services you provide to your customers, and then obviously your returns to your shareholders and the growth of the firm,” Wedbush said.
Gerard Hoberg, the director of the Institute for Outlier Research in Business at USC, said investing in advanced technology will give Wedbush the ability to compete with the bigger players offering the same services as Wedbush and will attract “more sophisticated and larger investors.”
He also spoke of technology investment as it relates to a company’s size and client base, noting “an economy of scale.”
“If you’re a small operation, it doesn’t make as much sense for you to make that investment. But once you’re big, the cost of investment relative to what you get as a benefit with your customers – because there’s so many of them – becomes very favorable. The cost of building it is almost fixed,” Hoberg said.
One way Wedbush’s move to Pasadena aligns with its push toward technology is the city’s economic landscape – including its vicinity to the Jet Propulsion Laboratory and the California Institute of Technology – Wedbush said.
“Pasadena has a really strong, vibrant technology community and industry there because of those centers of excellence,” he said.
Reduction in real estate
After operating in downtown for more than 60 years, the company is moving to Pasadena, which will result in a 60% reduction in its real estate footprint and “significant” cost savings for the company, Wedbush said. Currently Wedbush is operating out of a temporary office space until it officially moves into the new headquarters next year.
The decision to move boiled down to a number of factors with one significant reason being the lasting impacts the pandemic has had on downtown, Wedbush said. Conversely, Wedbush said Pasadena city staff did “a fantastic job bringing the city out of the pandemic.”
“When you walk around (South Lake Avenue) in Pasadena, especially near where our building complex is going to be, you kind of feel like the pandemic never happened. Downtown served us really well for a long time, but that’s just not the case there. It’s on a path of recovery, but it still has a long way to go,” Wedbush said.
According to a July report from CBRE Group Inc., a real estate services company, vacancies in downtown Los Angeles have “swelled” with a 31.5% overall vacancy rate in office spaces, compared to 10.6% in the San Gabriel Valley.
Wedbush’s headquarters will occupy two floors of Pasadena’s Passaroyo building and include indoor and outdoor workspaces.
Another deciding factor for the move was Wedbush’s hybrid work schedule. With employees splitting their time between working from home and in the office, there was no longer a need to occupy so much real estate; the former downtown location spanned over 100,000 square feet.
In addition to the move to Pasadena, Wedbush said the firm plans to open a junior headquarters in South Bay or the Westside in the near future.
Calling the reduction in real estate size “a tremendous efficiency and cost savings” move for the company, Wedbush said the money it saves will go toward colleague programs and events.
This includes professional development opportunities where Wedbush will bring in guest speakers and trainers such as corporate coaches, communications coaches and experts from various industries.
Giving larger budgets to specific departments and divisions within Wedbush to allow them to expand their programming will be another function of the extra cash.
“Being able to take funds that were going to landlords and pipe them through to our colleagues is going to be transformative for the firm,” Wedbush said.
“High quality” social events will also see increased funding as Wedbush said he’s looking forward to planning more sports events, cocktail hours and barbecues for employees.
Global expansion
In line with a push toward globalization over the last couple of decades, Wedbush said the firm has been prioritizing expanding internationally in recent years through deals completed by Wedbush Securities and its parent company, Wedbush Financial Services.
“One of our main themes or strategy roadmaps for our firm is to take our services that really focus on smaller to midsize companies and midsize wealth and take that level of service around the world,” Wedbush said.
In July, Wedbush entered into a “strategic alliance” with Hana Securities, the securities firm for one of South Korea’s largest financial institutions. Hana’s investment in Wedbush creates cross-border investment banking services, gives Wedbush clients access to research and market insights and allows investors to trade internationally.
“It’s been great because the amount of investing and trading that’s being done now by retail investors outside of the U.S. is growing exponentially,” Wedbush said.
In September 2023, Wedbush became the largest shareholder in Velocity Trade, a Toronto-based global broker dealer. Earlier that year, Wedbush entered into a partnership with Maybank, Malaysia’s largest bank by market capitalization and total assets, that opened the door for U.S. institutional investors to trade in Southeast Asian markets and have access to Maybank’s research and market insights.
Hoberg called Wedbush’s global expansion strategy “well thought out” and believes it will pay off for the company. Specifically, Hoberg sees Wedbush’s expansion in Asia to be particularly lucrative calling L.A. “the center of connectivity to all of Asia” in both proximity and population within the U.S.
“If you are an L.A.-based financial institution, I think it’s a very heads up move, and that a lot of companies that want to expand in Asia should really be interested in engaging an investment bank that’s on the West Coast, and by doing this, (Wedbush) is going to put their name in front of a lot more people and get bigger deals,” Hoberg said.
