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Industry Spotlight > Broker Dealers

Number of Registered Reps Falls for Fifth Straight Year: FINRA

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What You Need to Know

  • The number of broker-dealers registered with FINRA dropped by 82 in 2020.
  • The total number of registered reps dropped 1.1%.
  • FINRA's 2021 snapshot includes new statistics on U.S. Treasury volume and corporate financing filing.

The total number of broker-dealers registered with the Financial Industry Regulatory Authority continues to decline, falling by 2.3% — or by 82 firms — to 3,435 in 2020 from 3,517 in 2019, according to FINRA’s 2021 industry snapshot.

The total number of registered representatives dropped 1.1% — or by 7,125 individuals — to 617,549 registered reps in 2020 vs. 624,674 in 2019.

The number of registered reps has fallen every year since 2016. The number of BDs has fallen every year since at least 2011.

Of the total number of registered reps in 2020, 317,936 were registered purely with broker-dealers versus 299,613 who were dually registered with BDs and RIAs. The former figure has been falling over the past few years, while the latter has been rising.

Susan Schroeder, vice chair of WilmerHale’s securities and financial services department and former head of enforcement at FINRA, told ThinkAdvisor in an email message that “the decreasing number of individual registered representatives is significant. We’ve all seen the impact of new technology and how easy it can be to trade on an app – many investors want electronic self-directed accounts and no intermediation by any individual broker.”

FINRA’s largest regulatory programs, Schroeder continued, “like its sales practice exams, are largely focused on individual representatives’ interactions with broker-dealer customers. But fewer individual registered representatives actually interact with customers every day. FINRA will have to re-examine its sales practice programs and priorities to assess whether they continue to address the real risks in the industry — it may be that the future of broker-dealer regulation is focused on trading and execution more than sales practices.”

As to the number of firms leaving the industry, 206 left in 2019 versus 210 in 2020. In 2019, there were 116 firms that left the industry versus 128 in 2020.

The snapshot is FINRA’s annual statistical report on the brokerage firms, registered representatives and market activity that FINRA regulates. The 2021 edition includes new statistics on U.S. Treasury volume and corporate financing filings.

It also includes 2020 data on the size and geographic distribution of the firms FINRA regulates, the number of individuals in the industry, equity and fixed income trading activity, and how firms marketed their products and services last year.

“The Snapshot provides visibility into the broad range of firms, individuals and trading activity that FINRA oversees. We’ve added additional data sets to this year’s edition, specifically data on Treasury market activity, focusing on volumes by both participant and product type,” said FINRA Chief Economist Jonathan Sokobin in a statement.

Six states hold the vast majority of firms: New York (1,482), California (948), Florida (690), Illinois (616), Texas (609) and New Jersey (453).


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