If a lawyer in Houston can get into a pre-IPO deal, a large brokerage can too. The reason many financial advisors and Wall Street firms don’t steer clients that way, in this short, is the fees. When a company is private there is less public disclosure, which those firms may treat as extra risk. More important, once the money leaves an account where the firm is sweeping an annual fee, collecting a mutual-fund fee, or earning payment for order flow, that revenue stops.
They’re not in the business of telling you to take money out of the stock market and put it into pre-IPOs. You can often get a better entry on companies such as OpenAI or Anthropic, or on a still-private SpaceX, than you can on Microsoft or Oracle after they’re already public, because private companies tend to trade at a discount to that later public value. The moment you sell the Microsoft stock in a Fidelity account and wire the proceeds into a pre-IPO deal, the firm can no longer sweep fees on that money.
Key points
- Large brokerages could offer pre-IPO deals; many don’t, in this telling, because of how they get paid.
- Less public disclosure on private companies is one stated reason; lost account fees are the bigger one.
- Payment for order flow and mutual-fund or advisory fees depend on money staying in the public markets.
- Private companies can be cheaper than their later public counterparts, which is exactly when the money would leave those fee-paying accounts.
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