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 $11 million fine and Raymond James' net income affected by increased advertising expenses. Over all, IBD revenues were aided by the long-running bull market and the continued trend toward fee-based revenue, but regulatory change out of Washington in the form of a redefined fiduciary definition by the Department of Labor may well affect most BDs' top lines in the near future.
By Annual Revenue
| Rank | Company | 2014 Gross revenue ($ 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 |
| 4 | Northwestern Mutual | $748.8 | NA | $384.6 | $98.8 |
| 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 |
| 7 | Securities America | $525.5 | NA | $223.8 | $253.0 |
| 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 | $281.7 |
All data is as of Dec. 31, 2014, and was supplied by the broker-dealers themselves. Investment Advisor has not independently confirmed the data.
Who's winning the recruiting wars? Looking at the raw numbers, in the first quarter of 2015, LPL crossed the 14,000 rep mark, while Raymond James' total rep force (including independent and employee reps) hit a record 6,384. While most IBDs can't, or won't, match the financial incentives of the wirehouses for advisors to jump ship, the offer of more freedom seems to be resonating with brokers. In February, Cerulli reported that the RIA and hybrid channels will increase their share of assets from 20% in 2013 to 28% by 2018; that growth, Cerulli said, has "come at the expense" of the wirehouse channel.
By Number of Reps
| Rank | Company | 2014 Gross revenue ($ mil.) | 2014 BD Total Expenses ($ mil.) | 2014 Fee-Based Revenue ($ mil.) | 2014 Avg. BD Concession Per Rep ($ Thous.) |
| 1 | LPL Financial LLC | 14,036 | 1,771 | 1,408 | 25 |
| 2 | Northwestern Mutual | 5,770 | NA | NA | 47 |
| 3 | Transamerica Financial Advisors Inc. | 5,103 | 982 | NA | 31 |
| 4 | MML Investors Services LLC | 3,923 | 1,059 | 922 | 34 |
| 5 | Raymond James Financial Services Inc. | 3,379 | NA | NA | 41 |
| 6 | HD Vest Financial Services | 2,756 | 248 | 119 | 31 |
| 7 | Cambridge Investment Research Inc. | 2,713 | 338 | 193 | 34 |
| 8 | Cetera Advisor Networks LLC | 2,510 | 253 | 214 | 32 |
| 9 | Princor Financial Services Corp. | 2,098 | 2,098 | 392 | 47 |
| 10 | Securities America | 1,982 | NA | NA | 30 |
| 11 | Waddell & Reed Financial Advisors | 1,766 | 373 | 353 | 78 |
| 12 | Cetera Financial Institutions | 1,748 | 579 | 486 | 30 |
| 13 | Commonwealth Financial Network | 1,592 | 186 | 81 | 39 |
| 14 | Royal Alliance Associates Inc. | 1,560 | 52 | 115 | 26 |
| 15 | NFP Advisor Services | 1,393 | 260 | 149 | 16 |
| 16 | Signator Investors Inc. | 1,374 | 214 | 378 | 47 |
| 17 | National Planning Corp. | 1,335 | 103 | 127 | 17 |
| 18 | Cetera Financial Specialists | 1,309 | 40 | 119 | 33 |
| 19 | SagePoint Financial Inc. | 1,292 | 197 | 196 | 45 |
| 20 | Ameritas Investment Corp. | 1,192 | 106 | 144 | 32 |
| 21 | Cetera Advisors LLC | 1,161 | 126 | 83 | 33 |
| 22 | INVEST Financial Corporation | 1,134 | 193 | 148 | 33 |
| 23 | Securian Financial Services Inc. | 1,083 | 196 | 148 | 32 |
| 24 | Woodbury Financial Services Inc. | 1,061 | 84 | 94 | 105 |
| 25 | ProEquities Inc. | 1,050 | 181 | 201 | 31 |
All data is as of Dec. 31, 2014, and was supplied by the broker-dealers themselves. Investment Advisor has not independently confirmed the data.
Unlike revenues or rep count, when it comes to highest average annual production per rep, the biggest isn't always the greatest. Most broker-dealers these days are more interested in having fewer but bigger producers, and back up that interest with various support programs to make successful producers even more successful. That's why in the ranking below you'll find a broader range (as measured by reps) of BDs. Commonwealth Financial, Raymond James, Geneos, Prospera and VSR have traded places among the top five in production over the past five years, and their rep forces range from 3,300 for RJ and 1,500 for Commonwealth to 262 for VSR, 252 for Geneos and 138 for Prospera.
| Rank | Company | 2014 Gross revenue ($ mil.) | 2014 BD Total Expenses ($ mil.) | 2014 Fee-Based Revenue ($ mil.) | 2014 Avg. BD Concession Per Rep ($ Thous.) |
| 1 | Raymond James Financial Services Inc. | $530,000 | $71.3 | $87.9 | $17.8 |
| 2 | Commonwealth Financial Network | $497,671 | $60.8 | $48.4 | $11.6 |
| 3 | Geneos Wealth Management Inc. | $447,362 | $50.0 | $6.0 | NA |
| 4 | VSR Financial Services Inc. | $370,738 | $44.2 | NA | NA |
| 5 | Prospera Financial Services | $350,000 | $48.0 | $1.4 | NA |
| 6 | Summit Brokerage Services Inc. | $333,308 | $6.3 | $2.2 | $5.3 |
| 7 | First Allied Securities Inc. | $320,641 | $9.0 | $7.1 | $3.9 |
| 8 | Kalos Capital | $317,000 | $40.0 | NA | NA |
| 9 | Founders Financial Securities LLC | $314,652 | $31.3 | $0.9 | $0.9 |
| 10 | NFP Advisor Services | $301,912 | $68.3 | $15.3 | $10.4 |
| 11 | The Strategic Financial Alliance | $300,000 | $31.0 | $1.5 | $1.8 |
| 12 | Triad Advisors | $298,000 | $42.5 | $3.1 | NA |
| 13 | J. P. Turner & Company LLC | $291,150 | $1.4 | $0.4 | $4.6 |
| 14 | M Holdings Securities Inc. | $288,236 | $60.0 | $4.0 | $3.2 |
| 15 | SII Investments Inc. | $281,681 | NA | $6.2 | $18.4 |
| 16 | Investment Centers of America Inc. | $272,049 | NA | $3.1 | $10.8 |
| 17 | LPL Financial LLC | $268,892 | $33.8 | $475.1 | $138.0 |
| 18 | Royal Alliance Associates Inc. | $264,886 | $38.2 | $18.6 | $18.9 |
| 19 | FSC Securities Corporation | $264,421 | $37.4 | $9.4 | $11.8 |
| 20 | American Portfolios Financial Services Inc. | $263,502 | $31.4 | $4.0 | $2.9 |
| 21 | Halliday Financial | $260,000 | $32.0 | $0.3 | NA |
| 22 | National Planning Corp. | $256,677 | NA | $12.2 | $11.6 |
| 23 | Securian Financial Services Inc. | $255,655 | $18.4 | $9.8 | NA |
| 24 | Cetera Advisors LLC | $253,110 | $8.5 | $9.7 | $9.0 |
| 25 | Securities America | $253,030 | $30.7 | $21.4 | $7.6 |
All data is as of Dec. 31, 2014, and was supplied by the broker-dealers themselves. Investment Advisor has not independently confirmed the data.
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