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May 25, 2021 at 05:19 PM
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.”
