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Financial Planning > Behavioral Finance

The 2014 Broker-Dealer Reference Guide

By James J. Green, Liana Roberts

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Some observers of the independent broker-dealer universe might be tempted to explain its current state by counting the acquisitions that Nicholas Schorsch’s Realty Capital has made over the past year. Acquiring Cetera, Investors Capital, J.P. Turner, Summit Brokerage Services (and Larry Roth) will give Realty Capital about 9,000 reps, roughly $200 billion in assets and some top-flight management.

One might be forgiven in thinking the BD trend is all about consolidation, but conversations with one BD president after another paint a different picture. While margins are thin and compliance costs are getting higher, 100% of the 58 BD presidents in our poll said they believe in the viability of the IBD model.

Large BD networks might provide some scale, and small BDs might not provide all the same services as the big boys, but as SSG President Dan Skiles says, “size doesn’t matter anymore.” In a world of outsourcing, cloud-based systems and more competition in the advisor technology space, a “smaller firm can actually have better technology” than a larger firm burdened with legacy tech systems. Better technology, smart management, and responsive customer service can make any size broker-dealer successful.

The following pages show the top 25 broker-dealers by various metrics like annual revenue, number of reps and friendliness to RIAs.

You can also click here to see a PDF of the 2014 directory of independent broker-dealers.

By Annual Revenue

LPL’s leaders acknowledged in April that higher costs and low recruiting numbers put a damper on the broker-dealers net income, even as net revenue and adjusted earnings grew. “After a slow start to recruiting to begin the year, our business development team saw improving conditions in March,” said Chairman and CEO Mark Casady. “As a result, we finished the quarter with 53 net new advisors and are seeing positive momentum in our pipeline heading into the second quarter.”

Rank

Company

2013 Gross revenue ($ mil.)

2013 BD Total Expenses ($ mil.)

2013 Fee-Based Revenue ($ mil.)

2013 Avg. BD Concession Per Rep ($ Thous.)

1

LPL Financial LLC

$4,050.0

$3,630.0

$1,180.0

$234.2

2

Raymond James Financial Services Inc.

$1,352.0

NA

$540.0

$458.0

3

Commonwealth Financial Network

$822.1

NA

$440.4

$464.1

4

Northwestern Mutual

$654.5

NA

$308.6

$86.5

5

Cambridge Investment Research Inc.

$574.4

$536.1

$277.7

$221.3

6

Securities America Inc.

$475.0

NA

$191.9

$271.4

7

Royal Alliance Associates Inc.

$444.4

NA

$170.8

$239.6

8

Cetera Advisor Networks LLC

$436.0

NA

$162.5

$189.6

9

Waddell & Reed Financial Advisors

$426.0

NA

$159.7

$199.7

10

National Planning Corporation

$382.7

NA

$94.1

$237.4

11

NFP Advisor Services

$381.0

NA

$121.6

$298.8

12

MML Investors Services

$360.8

$358.7

$72.0

$60.1

13

Securian Financial Services

$355.4

NA

$75.1

$334.5

14

FSC Securities Corporation

$280.3

NA

$93.9

$241.0

15

Princor Financial Services Corp.

$279.9

$272.7

$38.1

$114.0

16

SagePoint Financial Inc.

$278.6

NA

$76.1

$162.2

17

INVEST Financial Corporation

$278.1

NA

$53.5

$216.2

18

HD Vest Financial Services

$273.2

NA

$100.1

$103.6

19

First Allied Securities Inc.

$272.3

$263.4

$74.4

$336.1

20

Transamerica Financial Advisors Inc.

$267.3

$41.3

$57.0

NA

21

Cetera Advisors

$261.5

NA

$89.1

NA

22

Signator Investors Inc.

$261.2

NA

$39.7

$168.8

23

Woodbury Financial Services Inc.

$250.8

NA

$32.2

$204.2

24

Cetera Financial Institutions LLC

$248.7

NA

$14.8

$140.8

25

SII Investments Inc.

$189.6

NA

$45.7

$274.2

All data is as of Dec. 31, 2013, and was supplied by the broker-dealers themselves. Investment Advisor has not independently confirmed the data.

By Number of Reps

Despite the “slow start to recruiting” LPL CEO and Chairman Mark Casady said the firm had in 2014, LPL was still well ahead of other broker-dealers last year. Proposed regulations could keep recruiting efforts slow, though. A rule proposed by FINRA would require disclosure and reporting of recruitment deals, which some advisors say could stifle competition and keep reps at firms even if leaving would better serve their clients’ interests, Research magazine’s Janet Levaux reported in April. The SEC was expected to act on that proposal by mid-May, but as of press time, had not announced its intentions.

Rank

Company

Ratio of Reps to Home Office Staff

Home Office Staff

Staff Recruiters

Compliance Professionals

1

Century Securities Associates Inc.

1.0 : 1

150

1

50

2

Raymond James Financial Services Inc.

1.3 : 1

2,584

15

120

3

Cetera Advisors

2.2 : 1

513

NA

NA

4

Commonwealth Financial Network

2.5 : 1

604

7

60

5

First Allied Securities Inc.

2.5 : 1

263

3

49

6

Cetera Financial Institutions LLC

2.7 : 1

621

NA

NA

7

Cetera Financial Specialists

2.8 : 1

503

NA

NA

8

Kalos Capital

2.9 : 1

28

1

3

9

Prospera Financial Services

3.2 : 1

42

4

5

10

J.P. Turner & Company LLC

3.3 : 1

100

2

10

11

PlanMember Securities Corporation

3.3 : 1

135

4

6

12

VSR Financial Services Inc.

3.4 : 1

76

1

6

13

Investment Centers of America Inc.

3.7 : 1

91

3

15

14

Securities America Inc.

3.9 : 1

452

9

36

15

Berthel Fisher & Co. Financial Services Inc.

4.1 : 1

79

2

8

16

Summit Brokerage Services Inc.

4.2 : 1

82

5

12

17

Cambridge Investment Research Inc.

4.3 : 1

579

22

51

18

Cetera Advisor Networks LLC

4.6 : 1

542

NA

NA

19

LPL Financial LLC

4.6 : 1

2,991

NA

370

20

The Strategic Financial Alliance Inc.

4.7 : 1

25

1

5

21

NEXT Financial Group

4.8 : 1

158

6

29

22

Founders Financial Securities LLC

4.9 : 1

14

1

3

23

Geneos Wealth Management Inc.

5.2 : 1

50

2

12

24

Sigma Financial Corporation

5.7 : 1

103

4

25

25

Investacorp Inc.

6.0 : 1

75

3

9

All data is as of Dec. 31, 2013, and was supplied by the broker-dealers themselves. Investment Advisor has not independently confirmed the data.

By Highest Average Production

Is it just me or is “production” starting to sound like a vestigial term? Yes and no. Yes, because it remains perhaps the clearest way to measure which rep is most successful at sales, but no, because so much of a broker-dealer (and rep’s) income arises from fees. Here’s another way to look at production: Raymond James Financial Services’ Scott Curtis said that at the recent Tiburon CEO conference, a panel of robo-advisor providers was asked about the size of the accounts on their online platform. The answer: an average of $17,000 and a median of $7,000.

Rank

Company

Avg. Annual Gross Production per Advisor

Avg. AUM per Advisor ($ mil.)

AUM in Fee-Based Programs ($ Bil.)

Excess Capital ($ mil.)

1

Raymond James Financial Services Inc.

$471,000

$65.0

$76.0

$17.9

2

Commonwealth Financial Network

$464,114

$57.8

$40.8

$12.9

3

Geneos Wealth Management Inc.

$402,125

$47.0

$5.6

$0.4

4

VSR Financial Services Inc.

$364,086

$44.2

$4.2

$1.5

5

Prospera Financial Services

$340,000

$28.0

$1.4

$1.6

6

First Allied Securities Inc.

$336,081

$41.0

$7.9

$4.5

7

Securian Financial Services

$334,547

NA

$8.3

NA

8

Kalos Capital

$301,234

$40.0

NA

NA

9

The Strategic Financial Alliance Inc.

$300,000

$27.0

$1.6

$1.6

10

NFP Advisor Services

$298,791

$60.5

$12.7

$16.4

11

Founders Financial Securities LLC

$286,000

$26.0

$0.5

NA

12

Triad Advisors Inc.

$281,531

$38.3

$2.8

$3.1

13

SII Investments Inc.

$274,203

NA

$5.1

$13.0

14

Investment Centers of America Inc.

$274,048

NA

$2.5

$8.9

15

Summit Brokerage Services Inc.

$273,000

$32.0

$1.7

$6.5

16

Securities America Inc.

$271,417

$29.4

$18.7

$9.8

17

Securities Service Network Inc.

$258,141

$35.6

$6.5

$3.5

18

FSC Securities Corporation

$240,990

$33.4

$11.6

$13.3

19

Royal Alliance Associates Inc.

$239,575

$31.6

$19.9

$24.5

20

National Planning Corporation

$237,413

NA

$9.2

$11.7

21

LPL Financial LLC

$234,234

$32.1

$151.6

$150.8

22

Cetera Advisors

$233,906

$7.3

$5.8

$6.1

23

United Planners Financial Services

$233,289

$26.4

$3.2

$4.7

24

American Portfolios Financial Services Inc.

$222,160

$26.7

$4.1

$3.8

25

Cambridge Investment Research Inc.

$221,259

$25.8

$32.0

$21.1

All data is as of Dec. 31, 2013, and was supplied by the broker-dealers themselves. Investment Advisor has not independently confirmed the data.

By Friendliness to RIAs

This list shows the percentage of representatives that have their own RIA while also doing work through a broker-dealer, which represents both a defensive (retention) and offensive (attraction) strategy for BDs. This group of dually registered advisors remains the fastest growing segment of the advisor population, though new regulations from the Department of Labor or the SEC might have an effect on that growth. This friendliness to reps having their own RIA may well serve the interests of the broker-dealer as well, who can retain the rep’s brokerage business while “allowing” the rep to grow his or her fee business.

Rank

Company

Rep With Their Own RIA

CFPs in Total Rep Force

Average Years Experience (per Advisor)

1

Triad Advisors Inc.

75.4%

NA

19

2

Royal Alliance Associates Inc.

39.4%

NA

19

3

Securities Service Network Inc.

38.6%

NA

10

4

United Planners Financial Services

32.2%

NA

15

5

M Holdings Securities Inc.

28.2%

12.9%

NA

6

American Portfolios Financial Services Inc.

22.9%

11.5%

18

7

Kalos Capital

21.0%

6.2%

20

8

FSC Securities Corporation

20.1%

NA

NA

9

First Allied Securities Inc.

20.1%

20.2%

19

10

LPL Financial LLC

17.9%

NA

15

11

Cambridge Investment Research Inc.

16.8%

NA

18

12

Capital Investment Companies

15.8%

11.2%

NA

13

Securities America Inc.

15.5%

27.8%

NA

14

Independent Financial Group

14.2%

14.6%

17

15

Crown Capital Securities L.P.

13.8%

22.9%

18

16

Geneos Wealth Management Inc.

13.5%

NA

20

17

ProEquities Inc.

12.8%

NA

NA

18

LaSalle St. Securities LLC

12.3%

9.0%

15

19

Commonwealth Financial Network

11.4%

46.6%

NA

20

National Planning Corporation

8.7%

NA

NA

21

Girard Securities Inc.

7.9%

32.0%

18

22

SagePoint Financial Inc.

7.2%

NA

NA

23

Investacorp Inc.

6.7%

31.3%

10

24

Harbour Investments

6.1%

17.9%

20

25

H. Beck Inc.

6.1%

17.2%

NA

All data is as of Dec. 31, 2013, and was supplied by the broker-dealers themselves. Investment Advisor has not independently confirmed the data.

Correction: Due to a miscalculation, some broker-dealers were inadvertently left off the list of the top 25 based on friendliness to RIAs. The table on this page shows the updated list.

By Home Office Support

At a time when broker-dealers need differentiation more than ever, the support from the home office is crucial to individual reps. As recruiting pro Jon Henschen pointed out recently to ThinkAdvisor.com, the most valued support can come from the corner office. Among the key ways that he’s seen BD presidents make a difference in supporting new and veteran reps is to make their cell phone number available to all advisors, calling 10 to 20 advisors per week to connect and making it a point to spend quality time with prospects visiting the home office and make occasional calls to new reps during their first few years of affiliation.

Rank

Company

Ratio of Reps to Home Office Staff

Home Office Staff

Staff Recruiters

Compliance Professionals

1

Century Securities Associates Inc.

1.0 : 1

150

1

50

2

Raymond James Financial Services Inc.

1.3 : 1

2,584

15

120

3

Cetera Advisors

2.2 : 1

513

NA

NA

4

Commonwealth Financial Network

2.5 : 1

604

7

60

5

First Allied Securities Inc.

2.5 : 1

263

3

49

6

Cetera Financial Institutions LLC

2.7 : 1

621

NA

NA

7

Cetera Financial Specialists

2.8 : 1

503

NA

NA

8

Kalos Capital

2.9 : 1

28

1

3

9

Prospera Financial Services

3.2 : 1

42

4

5

10

J.P. Turner & Company LLC

3.3 : 1

100

2

10

11

PlanMember Securities Corporation

3.3 : 1

135

4

6

12

VSR Financial Services Inc.

3.4 : 1

76

1

6

13

Investment Centers of America Inc.

3.7 : 1

91

3

15

14

Securities America Inc.

3.9 : 1

452

9

36

15

Berthel Fisher & Co. Financial Services Inc.

4.1 : 1

79

2

8

16

Summit Brokerage Services Inc.

4.2 : 1

82

5

12

17

Cambridge Investment Research Inc.

4.3 : 1

579

22

51

18

Cetera Advisor Networks LLC

4.6 : 1

542

NA

NA

19

LPL Financial LLC

4.6 : 1

2,991

NA

370

20

The Strategic Financial Alliance Inc.

4.7 : 1

25

1

5

21

NEXT Financial Group

4.8 : 1

158

6

29

22

Founders Financial Securities LLC

4.9 : 1

14

1

3

23

Geneos Wealth Management Inc.

5.2 : 1

50

2

12

24

Sigma Financial Corporation

5.7 : 1

103

4

25

25

Investacorp Inc.

6.0 : 1

75

3

9

All data is as of Dec. 31, 2013, and was supplied by the broker-dealers themselves. Investment Advisor has not independently confirmed the data.

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