Why we changed the name of our IBD rankings

It’s been a time of stunning change for independent broker-dealers. Widespread consolidation has shrunk their numbers and RIAs have encroached on their business models. The firms left standing? They are the Elite IBDs. It’s for this reason (among a few others) we changed the name of our annual, exclusive IBD ranking from FP50. While the latter aptly described Financial Planning’s list, IBD Elite more accurately characterizes the nature and business models of firms that have embraced change, transformation, evolution and openness.

“With IBDs consolidating at or nearly as fast as any other sector or industry in our economy, firms are understandably growing more opaque. So I think it’s important to recognize firms that are willing to disclose some or all of this data in a spirit of providing relevant information to the marketplace as ‘elite,’” Senior Editor Tobias Salinger tells me.

Salinger, who wrote our main feature, “IBD Elite 2019: Time to celebrate? Not just yet,” says there’s another reason the new name is more accurate. “The fact that we rank them based on topline revenue may place one firm on the top of the heap and another on the bottom, but that doesn’t mean the bottom poses no threat to the top. It’s smart that the new name doesn’t focus on the number of IBDs,” he says.

This year’s list clearly illustrates major industry trends. Revenue jumped by 10.4% — the largest increase since 2014. Fee revenue also exceeded commission revenue for the second straight year. “The trend of total fee revenue eclipsing commission revenue seems quite clear,” says Craig Israelsen, a professor at Utah Valley University and a Financial Planning contributing writer who has analyzed the FP rankings for about two decades.

But there’s another trend I’d like to see. Of the firms that answered our question on women reps, only one has more than 30% female producing reps, Israelsen points out. Surely, in this time of change and transformation, diversity and inclusion should be front and center.