A boutique brokerage, much like a boutique shop, is a smaller organization that specializes in personalized service and often serves a smaller and more exclusive clientele than a larger firm would. It’s not uncommon for a boutique brokerage to operate exclusively with family and friends, and forgo advertising campaigns, as well as relying on word of mouth to attract new customers to their investment services. The term “boutique brokerage” usually refers to a brokerage specializing in stock market investments, but it may also refer to a real estate broker, or a broker in another field, such as information technology.
Boutique brokerages typically do not charge fees the way a larger brokerage might. Instead, the boutique brokerage will take a percentage of any profits generated by a transaction. For this reason, a boutique brokerage can afford to focus on the large investments of a smaller number of clients, since they do not need to rely on volume to turn a profit. Lower overhead costs, due to smaller space requirements, fewer salaries, and virtually no big advertising also help the boutique brokers to focus on their exclusive clientele.
Boutique brokerages tend to serve very high net worth individuals and families, and pride themselves on establishing long term relationships with clients; sometimes over generations. They may even act as a private bank for their clients, and have been known to arrange lines of credit for them, even up to fifty million dollars in some cases. If for example, you wanted to purchase the Four Seasons Hotel in Miami but your liquid capital was tied up in other investments, your boutique brokerage, knowing your net worth and the net worth of your family, would be able to extend you the credit and allow you to take advantage of the opportunity to purchase the property. With friends like those, it’s no wonder word of mouth travels quickly about the best boutique brokerages.