From the June 2015 issue of Investment Advisor • Subscribe!

The 2015 Broker-Dealer Reference Guide

Over the 35-year history of Investment Advisor, the brokerage industry has seen monumental changes. In the independent BD world, those changes, while significant, have been better handled than in the wirehouses. That's because independents have needed to be flexible in their business approach, imaginative in forming their value propositions and welcoming to representatives, who can always vote with their feet and bring their clients and their assets along with them. Perhaps that's why every IBD leader in our annual Presidents Poll believes in the long-term viability of the industry. That's also why, despite industry consolidation, the expensive necessity of investing in top-notch technology and a shifting regulatory environment, IBDs continue to attract refugees from the wirehouses.

Not all is sunny in IBD land, however. As independents’ pockets grow deeper, regulators can slap bigger fines on them. As reps’ independence (and bigger payout) desires are embraced by RIA custodian programs, IBDs are instituting payout grids that approach RIA levels, while a number have built their own in-house RIA custodians. Still, the reports of IBDs’ demise have been premature for many years and are likely to remain so into the future.

Click here to download a PDF of the reference guide.

The two largest public company IBDs—LPL Financial and Raymond James Financial—dominate the revenue rankings, as might be expected. In 2015's first quarter, both firms posted mixed results, with LPL's earnings hurt by an $11 million fine and Raymond James’ net income affected by increased advertising expenses. Over all, IBD revenues were aided by the long-running bull market and the continued trend toward fee-based revenue, but regulatory change out of Washington in the form of a redefined fiduciary definition by the Department of Labor may well affect most BDs’ top lines in the near future.

By Annual Revenue

Rank

Company

2014 Gross revenue ($ mil.)

2014 BD Total Expenses ($ mil.)

2014 Fee-Based Revenue ($ mil.)

2014 Avg. BD Concession Per Rep ($ Thous.)

1 LPL Financial LLC  $4,293.9  $3,900.1  $1,328.6  $249.7
2 Raymond James Financial Services Inc.  $1,565.0  NA  $683.0  $471.0
3 Commonwealth Financial Network  $950.3  NA  $537.3  $697.7
4 Northwestern Mutual  $748.8  NA  $384.6  $98.8
5 Cambridge Investment Research Inc.  $651.4   $614.9  $332.5  $228.5
6 Cetera Advisor Networks LLC  $564.8  NA  $222.5  $197.5
7 Securities America  $525.5  NA  $223.8  $253.0
8 Waddell & Reed Financial Advisors  $500.1  NA  $203.9  $210.3
9 Royal Alliance Associates Inc.  $463.9  NA  $198.2  $264.9
10 NFP Advisor Services  $420.2  NA  $146.6  $301.9
11 National Planning Corp.  $408.7  NA  $107.4  $256.7
12 MML Investors Services LLC  $384.7  $373.4  $83.9  $68.0
13 Securian Financial Services Inc.  $310.1  NA  $83.1  $255.7
14 Princor Financial Services Corp.  $309.1  $302.1  $46.9  $123.8
15 SagePoint Financial Inc.  $305.6  NA  $91.3  $213.4
16 HD Vest Financial Services  $304.9  NA  $120.2  $94.7
17 FSC Securities Corporation  $297.4  NA  $106.2  $264.4
18 First Allied Securities Inc.  $294.0  NA  $70.7  $320.6
19 Cetera Advisors LLC  $293.9  NA  $113.6  $223.3
20 Signator Investors Inc.  $289.4  NA  $50.2  $210.6
21 Cetera Financial Institutions  $285.6  NA  $31.8  $137.6
22 INVEST Financial Corporation  $283.1   NA  $63.7  $223.6
23 Transamerica Financial Advisors Inc  $282.4  $40.3  $61.4  NA
24 Woodbury Financial Services Inc.  $262.3  NA  $42.2  $225.3
25 SII Investments Inc.  $193.1  NA  $56.6  $281.7

All data is as of Dec. 31, 2014, and was supplied by the broker-dealers themselves. Investment Advisor has not independently confirmed the data.

Who's winning the recruiting wars? Looking at the raw numbers, in the first quarter of 2015, LPL crossed the 14,000 rep mark, while Raymond James’ total rep force (including independent and employee reps) hit a record 6,384. While most IBDs can't, or won't, match the financial incentives of the wirehouses for advisors to jump ship, the offer of more freedom seems to be resonating with brokers. In February, Cerulli reported that the RIA and hybrid channels will increase their share of assets from 20% in 2013 to 28% by 2018; that growth, Cerulli said, has “come at the expense” of the wirehouse channel.

By Number of Reps

Rank

Company

2014 Gross revenue ($ mil.)

2014 BD Total Expenses ($ mil.)

2014 Fee-Based Revenue ($ mil.)

2014 Avg. BD Concession Per Rep ($ Thous.)

 1 LPL Financial LLC  14,036  1,771  1,408  25
 2 Northwestern Mutual  5,770  NA  NA  47
 3 Transamerica Financial Advisors Inc.  5,103  982  NA  31
 4 MML Investors Services LLC  3,923  1,059  922  34
 5 Raymond James Financial Services Inc.  3,379  NA  NA  41
 6 HD Vest Financial Services  2,756  248  119  31
 7 Cambridge Investment Research Inc.  2,713  338  193  34
 8 Cetera Advisor Networks LLC  2,510  253  214  32
 9 Princor Financial Services Corp.  2,098  2,098  392  47
 10 Securities America  1,982  NA  NA  30
 11 Waddell & Reed Financial Advisors  1,766  373  353  78
 12 Cetera Financial Institutions  1,748  579  486  30
 13 Commonwealth Financial Network  1,592  186  81  39
 14 Royal Alliance Associates Inc.  1,560  52  115  26
 15 NFP Advisor Services  1,393  260  149  16
 16 Signator Investors Inc.  1,374  214  378  47
 17 National Planning Corp.  1,335  103  127  17
 18 Cetera Financial Specialists  1,309  40  119  33
 19 SagePoint Financial Inc.  1,292  197  196  45
 20 Ameritas Investment Corp.  1,192  106  144  32
 21 Cetera Advisors LLC  1,161  126  83  33
 22 INVEST Financial Corporation  1,134  193  148  33
 23 Securian Financial Services Inc.  1,083  196  148  32
 24 Woodbury Financial Services Inc.  1,061  84  94  105
 25 ProEquities Inc.  1,050  181  201  31

All data is as of Dec. 31, 2014, and was supplied by the broker-dealers themselves. Investment Advisor has not independently confirmed the data.

Unlike revenues or rep count, when it comes to highest average annual production per rep, the biggest isn't always the greatest. Most broker-dealers these days are more interested in having fewer but bigger producers, and back up that interest with various support programs to make successful producers even more successful. That's why in the ranking below you’ll find a broader range (as measured by reps) of BDs. Commonwealth Financial, Raymond James, Geneos, Prospera and VSR have traded places among the top five in production over the past five years, and their rep forces range from 3,300 for RJ and 1,500 for Commonwealth to 262 for VSR, 252 for Geneos and 138 for Prospera.

Rank

Company

2014 Gross revenue ($ mil.)

2014 BD Total Expenses ($ mil.)

2014 Fee-Based Revenue ($ mil.)

2014 Avg. BD Concession Per Rep ($ Thous.)

 1 Raymond James Financial Services Inc.  $530,000  $71.3  $87.9  $17.8
 2 Commonwealth Financial Network  $497,671  $60.8  $48.4  $11.6
 3 Geneos Wealth Management Inc.  $447,362  $50.0  $6.0  NA
 4 VSR Financial Services Inc.  $370,738  $44.2  NA  NA
 5 Prospera Financial Services  $350,000  $48.0  $1.4  NA
 6 Summit Brokerage Services Inc.  $333,308  $6.3  $2.2  $5.3
 7 First Allied Securities Inc.  $320,641  $9.0  $7.1  $3.9
 8 Kalos Capital  $317,000  $40.0  NA  NA
 9 Founders Financial Securities LLC  $314,652  $31.3  $0.9  $0.9
 10 NFP Advisor Services  $301,912  $68.3  $15.3  $10.4
 11 The Strategic Financial Alliance  $300,000  $31.0  $1.5  $1.8
 12 Triad Advisors  $298,000  $42.5  $3.1  NA
 13 J. P. Turner & Company LLC  $291,150  $1.4  $0.4  $4.6
 14 M Holdings Securities Inc.  $288,236  $60.0  $4.0  $3.2
 15 SII Investments Inc.  $281,681  NA  $6.2  $18.4
 16 Investment Centers of America Inc.  $272,049  NA  $3.1  $10.8
 17 LPL Financial LLC  $268,892  $33.8  $475.1  $138.0
 18 Royal Alliance Associates Inc.  $264,886  $38.2  $18.6  $18.9
 19 FSC Securities Corporation  $264,421  $37.4  $9.4  $11.8
 20 American Portfolios Financial Services Inc.  $263,502  $31.4  $4.0  $2.9
 21 Halliday Financial  $260,000  $32.0  $0.3  NA
 22 National Planning Corp.  $256,677  NA  $12.2  $11.6
 23 Securian Financial Services Inc.  $255,655  $18.4  $9.8  NA
 24 Cetera Advisors LLC  $253,110  $8.5  $9.7  $9.0
 25 Securities America  $253,030  $30.7  $21.4  $7.6

All data is as of Dec. 31, 2014, and was supplied by the broker-dealers themselves. Investment Advisor has not independently confirmed the data.

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