IBD Elite 2022: 15 Largest Independent Wealth Managers
Anyone suggesting that independent brokerages are losing business to registered investment advisers must not know how much money brokerages made last year.
Payday is coming as wealth managers are increasingly overlap on both sides of the industry’s largest division: commission-based brokerage and advisory fee-based RIA. The 15 companies ranked below by their 2021 revenue, as surveyed in Financial planningit is 37th Annual Elite IBD Studyoperate as dual registration businesses, which means they consist of both brokerages and AIRs and wear these different hats depending on the customer, service and product.
The paradigm, exemplified by LPL Financial, franchise channel Ameriprise, Advisor Group and Raymond James Financial Services, blurs the lines between once distinct models of the wealth management industry. Whether customers understand this configuration remains an open question. Most financial advisors get it. RIAs must put a client’s interests ahead of their own under fiduciary duty, while brokerages are held to a lower standard requiring them only to make recommendations in a client’s “best interests”. .
The flow of advisors bringing their clients to RIAs keep pushing their numbers and assets to save levels. Meanwhile, the ranks of brokers and brokerages continue to fall every year. Most of the momentum is heading towards the AIRs.
But not at all.
The 15 largest independent brokerages — wealth managers whose advisors are 1,099 entrepreneurs as opposed to W-2 employees — grew an average of 24% last year and generated more than $35 billion in combined revenue .
The expansion comes amid a competitive threat from RIA consolidation firms who often use a similar structure to independent brokerages but try to avoid the “broker” label. RIA consolidators are buying consultancies and corporations at scale, with many rollups of their networks to come out of independent brokers and their traditional wire house recruiting targets. These RIA rivals also own or use brokerages. More than half a dozen declined or did not respond to FP’s request to participate in the IBD Elite survey.
“I don’t know if it’s a misunderstanding or if it’s just a desire to position themselves in the market,” said Wayne Bloom, CEO of independent wealth management giant Commonwealth Financial Network, in an interview earlier this year. year. When brokers earn a commission, there’s a “perceived” conflict of interest, even when a transaction is “the best thing for the investor to do,” Bloom said. “It’s not a question an investor can ask, but another of the competitors vying for the business will have planted the seed with a potential customer.”
Bloom’s business and others listed below remain the workhorses of the independent brokerage channel, which thrived in 2021 amid acquisitions and higher gains in stock value.
Scroll through the slideshow to see the largest independent wealth management brokerages by annual revenue. To read IBD Elite’s cover story, “Brokerages are transforming, not disappearing”, Click here. For all of this year’s survey data in interactive format, follow this link. And, for a look at last year’s IBD Elite data, Click here.
Notes: Companies are ranked below based on their 2021 revenue, as reported by the companies themselves. FP relies on each company to accurately report its annual metrics. The industry term “producer registered representative” refers to the most specific number of financial advisors of each company using the company as a brokerage or RIA. “Other Income” means any other business in addition to sales commissions and consulting fees. Each metric is at the end of the year 2021.