Reformed Broker’s lacklustre tour

Book review: Backstage Wall StreetThe Reformed Broker, aka Joshua Brown, neither educates nor entertains with his look at the dying art of retail brokering.


By Joshua BrownMcGraw-Hill, £19.99

Visit any book shop, or log on to Amazon, and you'll quickly find lots of insider accounts' on life in big financial institutions. It seems that every ex-banker now has a blog and a Twitter account. But unless you work in the industry or have a friend who does, you're unlikely to meet top bankers on a regular basis.

For many people the main contact they have with the finance industry is through their broker. Backstage Wall Street, by Joshua The Reformed Broker' Brown, looks at this neglected part of the financial sector.

Subscribe to MoneyWeek

Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Get 6 issues free

Sign up to Money Morning

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Sign up

One of the main themes of Brown's book is that traditional stockbroking where a broker advises clients what to buy is a dying industry. As he puts it, "within a decade there will be more endangered giant pandas than retail brokers". Online trading and spread betting in Britain have stolen market share and reduced commissions. Meanwhile, boiler room' scams and sharp practices have led to increased regulation. As a result, retail brokerages are insisting on ever-higher account minimums, in turn making them less attractive.

However, as Brown points out, the model was flawed from the start. The emphasis on winning business rather than investment performance rewarded brokers with the gift of the gab, not investing skills. Being paid via trading commissions encouraged brokers to churn' (over-trade) clients' portfolios.

Brown is also highly critical of most funds, which charge high fees yet still underperform the market. He derides professional investment research as generally poor quality and beset with conflicts of interest, as the various scandals of the technology boom (and subsequent bust) demonstrated.

We wouldn't disagree with any of this. Indeed, it's all stuff that most MoneyWeek readers will be well aware of by now. And that's the problem. We're big fans of Brown's blog ( He has a punchy, entertaining style, and his takes on the latest market headlines are always interesting and frequently witty, so we were looking forward to reading his book.

But unlike Satyajit Das's Traders, Guns and Money, which manages to educate readers about the derivatives market while telling a good story in the process, Backstage Wall Street has neither enough meaty anecdotes nor enough educational content to really satisfy. We'd suggest you stick to the blog.

Backstage Wall Street: An Insider's Guide to Knowing Who to Trust, Who to Run From, and How to Maximize Your Investments, by Joshua Brown. Published by McGraw-Hill, £19.99.

Dr Matthew Partridge

Matthew graduated from the University of Durham in 2004; he then gained an MSc, followed by a PhD at the London School of Economics.

He has previously written for a wide range of publications, including the Guardian and the Economist, and also helped to run a newsletter on terrorism. He has spent time at Lehman Brothers, Citigroup and the consultancy Lombard Street Research.

Matthew is the author of Superinvestors: Lessons from the greatest investors in history, published by Harriman House, which has been translated into several languages. His second book, Investing Explained: The Accessible Guide to Building an Investment Portfolio, is published by Kogan Page.

As senior writer, he writes the shares and politics & economics pages, as well as weekly Blowing It and Great Frauds in History columns He also writes a fortnightly reviews page and trading tips, as well as regular cover stories and multi-page investment focus features.

Follow Matthew on Twitter: @DrMatthewPartri