What the Broker-Dealer Industry Looks Like Now, in 5 Charts

The Financial Industry Regulatory Authority has released its 2023 Industry Snapshot, the annual statistical report on the brokerage firms, registered representatives and market activity that FINRA oversees.

For the first time in years, the number of registered reps increased, and the number of people entering the industry was greater than the number leaving.

“The 2023 Snapshot maintains FINRA’s commitment to providing a data-driven view into the securities industry and its activities through the lens of regulatory reporting. We continue to add new data categories to the Industry Snapshot, increasing the transparency of and visibility into an evolving securities industry,” said FINRA Chief Economist and Executive Vice President Jonathan Sokobin in a statement.

In commenting on the FINRA report, Jon Henschen, president of Henschen & Associates, a firm that helps place advisors with broker dealers and RIAs, told ThinkAdvisor Friday in an email that “small and mid-sized firms continue to grow if they are successfully specialized, while generalist small and mid-sized firms are struggling to stand out so we see merging or selling to larger firms.”

Added Henschen: “As advisors have an ever larger percent of their business in advisory, getting their own RIA or joining an independent RIA continues to grow, reflected in the stats of RIAs growth climbing consistently each year. When advisors have 90-plus percent of their assets in advisory, we don’t have to convince them to go RIA because FINRA does the convincing for us.”

The recent 2022 upswing in the number of advisors getting into the broker-dealer business “we see as pent up energy from things being held back during Covid-19 lockdowns,” Henschen said.

This year’s edition adds new data about options trading activity, and certain demographic changes of FINRA-registered reps.

The 2023 Industry Snapshot incorporates several new topics including:

Options trading activity by account owner type;
Demographic changes in FINRA-registered reps by year and firm size;
Supplementary liquidity schedule providers by type and size, and sources of liquidity;
Taxable investment account ownership data from the FINRA Foundation’s National Financial Capability Study.

See the gallery above for five charts from FINRA on what the BD industry looks like now.