Facebook IPO participation as a status symbol

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Brokers and wealth advisors face a tough situation with the Facebook offering.

The fact is that no one knows whether it will be another Google or Microsoft, or just another tech company IPO that tanks in the aftermarket. Given its size and influence, most people would put it in the former category. But high net worth individuals still may not necessarily want to own the stock at the IPO price.

Bloomberg concludes that “wealthy investors aren’t clamoring for a piece of Facebook Inc. (FB)’s initial public offering because some own the stock through private transactions while others shy away from risky technology deals.” 

But here’s the thing: They want to be offered the chance to get in on the action, as confirmation of their status. If a broker is so lucky as to be able to get shares for clients, it will make for a nice exchange with the client. The broker gets to position himself as someone who can make amazing opportunities available to preferred clients.

But it’s going to be hard to get an allocation. Demand will be hot, and we’ll see the size of the IPO rise from the $5 billion initial level as we get closer to launch date. In any case, wealth advisors and brokers should be aware of the expectations of their top clients. It’s all about what you can do for them. 

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-here’s the article

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