Page 24 - Investment Advisor June 2023

Cover Story

Key FINRA Findings on BDs

Total Number of FINRA-Registered Firms, 2018−2022
(Count as of year-end)
3,607 3,517 3,435 3,394 3,378

2018 2019 2020 2021 2022
the total number of Bds registered with FInrA continues to
decline; there were 3,378 Bd firms in 2022, down 0.5% from
Today’s Broker-Dealer Business 3,394 in 2021. The number of BDs has been falling since
The Financial Industry Regulatory Authority just released its at least 2008, which is the first year reported in the FINRA
2023 Industry Snapshot, the annual statistical report on the snapshot. However, the number of FINRA-registered branch
brokerage firms, registered representatives and market activ- offices opening was greater than the number that closed for
ity that it oversees. For the first time in years, the number of the first time since 2014.
registered reps increased, and the number of people entering
the industry was greater than the number leaving. Total Number of FINRA-Registered Reps, 2018−2022
“The 2023 Snapshot maintains FINRA’s commitment to (Count as of year-end)
providing a data-driven view into the securities industry 629,475 624,620 617,507 612,435 620,882
and its activities through the lens of regulatory reporting,”
said FINRA Chief Economist and Executive Vice President
Jonathan Sokobin in a statement. “We continue to add new
data categories to the Industry Snapshot, increasing the trans-
parency of and visibility into an evolving securities industry.”
Digging into the report’s findings, Jon Henschen, presi-
dent of the recruiting firm Henschen & Associates, said
“small and mid-sized firms continue to grow if they are suc- 2018 2019 2020 2021 2022
cessfully specialized, while generalist small and mid-sized the total number of reps increased. There were 620,882 reps
firms are struggling to stand out so we see merging or selling in 2022, up 1.4% from 612,435 in 2021. It’s the first year-on-year
to larger firms.” increase since 2015. On average, there were about 187 reps per
Added Henschen: “As advisors have an ever larger percent firm, up from 182 in 2021. (The median number of reps per
of their business in advisory, getting their own RIA or joining firm is about 14.)
an independent RIA continues to grow, reflected in the stats
of RIAs’ growth climbing consistently each year. When advi- Registered Individuals by Type of Registration, 2022
sors have 90-plus percent of their assets in advisory, we don’t 12%
have to convince them to ‘go RIA’ because FINRA does the
convincing for us.” 44%
In terms of the 2022 upswing in the number of advisors securities
getting into the broker-dealer business, “we see [this] as Industry
pent up energy from things being held back during Covid registered Broker-Dealer Only
lockdowns,” he said. Individuals Dual Representatives
This year’s edition of the Industry Snapshot adds new Investment Adviser
data about options trading activity by account owner type; Representative Only
demographic changes in FINRA-registered reps by year and 44%
firm size; providers of supplementary liquidity schedules by
type and size, and sources of liquidity; and taxable investment More reps are dually registered. Of the total number of regis-
account ownership from the FINRA Foundation’s National tered reps in 2022, 308,565 were registered purely with broker-
Financial Capability Study. dealers while 312,317 were dually registered with BDs and RIAs.

22 Investment AdvIsor June 2023 | ThinkAdvisor.com