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.
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 $11 million fine and Raymond James’ net income affected by increased advertising expenses. Over all, IBD revenues were aided by the long-running bull market and the continued trend toward fee-based revenue, but regulatory change out of Washington in the form of a redefined fiduciary definition by the Department of Labor may well affect most BDs’ top lines in the near future.
By Annual Revenue
2014 Gross revenue ($ 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|
|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|
|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.