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 page shows the top 25 broker-dealers in annual revenue, just one part of Investment Advisor magazine’s 2014 Broker-Dealer Reference Guide.