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Industry Spotlight > Broker Dealers

The 2019 Broker-Dealer Reference Guide: Top of the Charts

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Industry consolidation continues to stand out in annual research conducted by the Financial Industry Regulatory Authority and Investment Advisor’s 2019 Broker-Dealer Reference Guide. FINRA’s 2018 figure for the total number of broker-dealers is 3,608, which is down from 3,727 in the prior year. The full count of registered representatives was 630,132 in 2018 vs. 629,847 in 2017.

For the BD Reference Guide, several firms that participated last year are now part of larger broker-dealers this year. Signator Investors, for instance, became part of Royal Alliance; it used to be part of John Hancock, which itself is a division of Manulife Financial.

A smaller number of firms naturally means a greater average number of advisors per independent BD. This statistic is about 1,470 vs. 1,332 a year ago — a 10% increase. Plus, the total number of advisors added at the nearly 50 broker-dealers participating in this year’s poll is about 4,500.

Average yearly (or trailing-12-month) fees and commissions — aka gross production — per registered rep is nearing $266,000 vs. roughly $240,000 in 2018, $230,000 in 2017 and $220,000 in 2016. Average assets per rep has improved to some $40 million from about $37.6 million last year, $31 million in the prior year and $27 million three years ago.

As for estimated average gross revenue per broker-dealer in 2019, that stands at roughly $284 million vs. about $237 million last year. Estimates for average fee-based revenue per broker-dealer have nearly doubled to about $193 million from $103 million a year ago.

LPL Financial’s latest full-year gross revenues soared more than 20% to nearly $5.2 billion in 2018 from about $4.3 billion in from 2017 — putting that IBD in the No. 1 slot. Earlier this year, LPL President and CEO Dan Arnold said the independent broker-dealer planned to give advisors more resources for growth. “Looking ahead, we have a large agenda for our service model,” Arnold explained.

Raymond James’ independent channel grew its gross revenues more than 16% year over year to $2.4 billion in 2018. In a presentation earlier this year, Chairman and CEO Paul Reilly said the broader Private Client Group has total revenues of about $5.1 billion for the fiscal year ending Sept. 30, 2018, vs. sales of $4.4 billion in the prior fiscal year. Other BDs with strong results in this area are Commonwealth Financial Network, Northwestern Mutual Investment Services, MML Investors Services and Cambridge Investment Research.

Top 10 by BD Gross Revenue

LPL Financial finds itself in the best position in this list, too. It sees its headcount poised to keep growing due to several factors, such as ongoing industry consolidation. According to Arnold, the IBD has been “working hard to improve the efficacy of our own team’s recruiting capabilities,” has an increasingly healthier recruiting pipeline and does “a better job of pulling through … prospects once they’re in the pipeline,” he added. Discussing its transition assistance and financial returns, Arnold explained, “those two things bode well for our continued ability to recruit going forward.”

As for No. 2 MML Investors Services, which is part of Massachusetts Mutual Life Insurance, it recently formed a partnership with investment manager Brinker Capital, so its existing and newly recruited advisors can access Brinker Capital Wealth Advisory for working with high-net-worth and institutional investors on its platform.

Top 10 by Number of Registered Reps

Helping advisors grow their practices is central to the work of all BDs. Some firms, though, truly excel at this task through new business-development programs, strong managerial support, technology-based programs and more.

Raymond James, for instance, recently promoted Kim Jensen to serve as COO of its Private Client Group; when Jensen was recruited from UBS to be COO of the employee channel, fan mail poured in from advisors, staff and outsiders.

Other leaders in this category are Commonwealth, Geneos, Prospera, Kestra, SFA and Founders Financial. In February, Kestra said it was being bought by the private equity group Warburg Pincus; President & CEO James Poer said at the time that, with the backing of its new owner, the firm would further improve its technology platform, build out its investment management research division (including its advice engine) and acquire more wealth management businesses.

Top 10 by Average Annual Gross Production

Triad Advisors and some of its counterparts specialize in working with registered reps with their own registered investment advisor firms. Triad, part of Ladenburg Thalmann, recruited Retirement Benefits Group — with over $10 billion in assets under administration — earlier this year; RBG affiliated with Triad partner Resources Investment Advisors.

“Firms like RBG that are ready to move to a new stage of growth require world-class infrastructure, a sophisticated understanding of the retirement plan space and a hands-on service model that can accelerate the success of their affiliated advisors,” said Triad President and CEO Jeff Rosenthal.

As for United Planners, it grew revenue 20% last year. “Our strategy, company structure and passion for supporting fiercely independent financial advisors are core to our mission,” said President Mike Baker. United Planners is 55% owned by affiliated financial advisors who qualify to be limited partners.

Top 10 by Number of Reps With Their Own RIA

See the Full Results of Top BDs of the Year

Janet Levaux is editor-in chief of Investment Advisor magazine. She can be reached at [email protected]. Research editor Liana Roberts compiled all data. She can be reached at [email protected].


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