Some observers of the independent broker-dealer universe might be tempted to explain its current state by counting the acquisitions that Nicholas Schorsch's Realty Capital has made over the past year. Acquiring Cetera, Investors Capital, J.P. Turner, Summit Brokerage Services (and Larry Roth) will give Realty Capital about 9,000 reps, roughly $200 billion in assets and some top-flight management.
One might be forgiven in thinking the BD trend is all about consolidation, but conversations with one BD president after another paint a different picture. While margins are thin and compliance costs are getting higher, 100% of the 58 BD presidents in our poll said they believe in the viability of the IBD model.
Large BD networks might provide some scale, and small BDs might not provide all the same services as the big boys, but as SSG President Dan Skiles says, "size doesn't matter anymore." In a world of outsourcing, cloud-based systems and more competition in the advisor technology space, a "smaller firm can actually have better technology" than a larger firm burdened with legacy tech systems. Better technology, smart management, and responsive customer service can make any size broker-dealer successful.
The following pages show the top 25 broker-dealers by various metrics like annual revenue, number of reps and friendliness to RIAs.
You can also click here to see a PDF of the 2014 directory of independent broker-dealers.
By Annual Revenue
LPL's leaders acknowledged in April that higher costs and low recruiting numbers put a damper on the broker-dealers net income, even as net revenue and adjusted earnings grew. "After a slow start to recruiting to begin the year, our business development team saw improving conditions in March," said Chairman and CEO Mark Casady. "As a result, we finished the quarter with 53 net new advisors and are seeing positive momentum in our pipeline heading into the second quarter."
| Rank | Company | 2013 Gross revenue ($ mil.) | 2013 BD Total Expenses ($ mil.) | 2013 Fee-Based Revenue ($ mil.) | 2013 Avg. BD Concession Per Rep ($ Thous.) |
| 1 | LPL Financial LLC | $4,050.0 | $3,630.0 | $1,180.0 | $234.2 |
| 2 | Raymond James Financial Services Inc. | $1,352.0 | NA | $540.0 | $458.0 |
| 3 | Commonwealth Financial Network | $822.1 | NA | $440.4 | $464.1 |
| 4 | Northwestern Mutual | $654.5 | NA | $308.6 | $86.5 |
| 5 | Cambridge Investment Research Inc. | $574.4 | $536.1 | $277.7 | $221.3 |
| 6 | Securities America Inc. | $475.0 | NA | $191.9 | $271.4 |
| 7 | Royal Alliance Associates Inc. | $444.4 | NA | $170.8 | $239.6 |
| 8 | Cetera Advisor Networks LLC | $436.0 | NA | $162.5 | $189.6 |
| 9 | Waddell & Reed Financial Advisors | $426.0 | NA | $159.7 | $199.7 |
| 10 | National Planning Corporation | $382.7 | NA | $94.1 | $237.4 |
| 11 | NFP Advisor Services | $381.0 | NA | $121.6 | $298.8 |
| 12 | MML Investors Services | $360.8 | $358.7 | $72.0 | $60.1 |
| 13 | Securian Financial Services | $355.4 | NA | $75.1 | $334.5 |
| 14 | FSC Securities Corporation | $280.3 | NA | $93.9 | $241.0 |
| 15 | Princor Financial Services Corp. | $279.9 | $272.7 | $38.1 | $114.0 |
| 16 | SagePoint Financial Inc. | $278.6 | NA | $76.1 | $162.2 |
| 17 | INVEST Financial Corporation | $278.1 | NA | $53.5 | $216.2 |
| 18 | HD Vest Financial Services | $273.2 | NA | $100.1 | $103.6 |
| 19 | First Allied Securities Inc. | $272.3 | $263.4 | $74.4 | $336.1 |
| 20 | Transamerica Financial Advisors Inc. | $267.3 | $41.3 | $57.0 | NA |
| 21 | Cetera Advisors | $261.5 | NA | $89.1 | NA |
| 22 | Signator Investors Inc. | $261.2 | NA | $39.7 | $168.8 |
| 23 | Woodbury Financial Services Inc. | $250.8 | NA | $32.2 | $204.2 |
| 24 | Cetera Financial Institutions LLC | $248.7 | NA | $14.8 | $140.8 |
| 25 | SII Investments Inc. | $189.6 | NA | $45.7 | $274.2 |
All data is as of Dec. 31, 2013, and was supplied by the broker-dealers themselves. Investment Advisor has not independently confirmed the data.
By Number of Reps
Despite the "slow start to recruiting" LPL CEO and Chairman Mark Casady said the firm had in 2014, LPL was still well ahead of other broker-dealers last year. Proposed regulations could keep recruiting efforts slow, though. A rule proposed by FINRA would require disclosure and reporting of recruitment deals, which some advisors say could stifle competition and keep reps at firms even if leaving would better serve their clients' interests, Research magazine's Janet Levaux reported in April. The SEC was expected to act on that proposal by mid-May, but as of press time, had not announced its intentions.
| Rank | Company | Ratio of Reps to Home Office Staff | Home Office Staff | Staff Recruiters | Compliance Professionals |
| 1 | Century Securities Associates Inc. | 1.0 : 1 | 150 | 1 | 50 |
| 2 | Raymond James Financial Services Inc. | 1.3 : 1 | 2,584 | 15 | 120 |
| 3 | Cetera Advisors | 2.2 : 1 | 513 | NA | NA |
| 4 | Commonwealth Financial Network | 2.5 : 1 | 604 | 7 | 60 |
| 5 | First Allied Securities Inc. | 2.5 : 1 | 263 | 3 | 49 |
| 6 | Cetera Financial Institutions LLC | 2.7 : 1 | 621 | NA | NA |
| 7 | Cetera Financial Specialists | 2.8 : 1 | 503 | NA | NA |
| 8 | Kalos Capital | 2.9 : 1 | 28 | 1 | 3 |
| 9 | Prospera Financial Services | 3.2 : 1 | 42 | 4 | 5 |
| 10 | J.P. Turner & Company LLC | 3.3 : 1 | 100 | 2 | 10 |
| 11 | PlanMember Securities Corporation | 3.3 : 1 | 135 | 4 | 6 |
| 12 | VSR Financial Services Inc. | 3.4 : 1 | 76 | 1 | 6 |
| 13 | Investment Centers of America Inc. | 3.7 : 1 | 91 | 3 | 15 |
| 14 | Securities America Inc. | 3.9 : 1 | 452 | 9 | 36 |
| 15 | Berthel Fisher & Co. Financial Services Inc. | 4.1 : 1 | 79 | 2 | 8 |
| 16 | Summit Brokerage Services Inc. | 4.2 : 1 | 82 | 5 | 12 |
| 17 | Cambridge Investment Research Inc. | 4.3 : 1 | 579 | 22 | 51 |
| 18 | Cetera Advisor Networks LLC | 4.6 : 1 | 542 | NA | NA |
| 19 | LPL Financial LLC | 4.6 : 1 | 2,991 | NA | 370 |
| 20 | The Strategic Financial Alliance Inc. | 4.7 : 1 | 25 | 1 | 5 |
| 21 | NEXT Financial Group | 4.8 : 1 | 158 | 6 | 29 |
| 22 | Founders Financial Securities LLC | 4.9 : 1 | 14 | 1 | 3 |
| 23 | Geneos Wealth Management Inc. | 5.2 : 1 | 50 | 2 | 12 |
| 24 | Sigma Financial Corporation | 5.7 : 1 | 103 | 4 | 25 |
| 25 | Investacorp Inc. | 6.0 : 1 | 75 | 3 | 9 |
All data is as of Dec. 31, 2013, and was supplied by the broker-dealers themselves. Investment Advisor has not independently confirmed the data.
