FP50: Dramatic changes for the largest IBDs

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Our annual FP50 ranking is a barometer for the industry overall and, true to form, this year’s list reveals several major changes.

For the first time in 33 years, the list of the nation’s largest independent broker-dealers shows that fee revenue is exceeding commission revenue.

“This represents a dramatic inflection point,” says Craig Israelsen, a professor at Utah Valley University and a Financial Planning contributing writer, who has analyzed the rankings for almost two decades. “The trend going forward seems to be quite clear. Fee revenue will be the growing segment of total revenue, whereas commission revenue will flatten out, or likely even decline.”

The shift is permanent, according to Financial Planning Associate Editor Tobias Salinger, who wrote the FP50 analysis, “Adapt to Survive.”

“This represents a dramatic inflection point.”

“There’s no turning back, ever, for the industry,” Salinger tells me.

In another example of how dramatically the IBD industry is evolving, note how consolidation is shrinking the number of companies that appear in the FP50. Case in point: Four NPH network firms dropped off the annual ranking after LPL Financial purchased National Planning Holdings.

“I expect to see fewer firms and more movement at the top of the list as competition and consolidation keep playing out,” Salinger says.

Other big changes may come to the FP50 next year, as well. Ameriprise has nearly supplanted LPL Financial at the top of the list, and “the gap is getting closer than ever,” Salinger tells me.

If there is a new No. 1 firm next year, Salinger notes, it would mark the first IBD other than LPL to lead the list since 2001.

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Independent BDs Strategic buyers Consolidations Revenue streams Commission-based compensation Fee-based compensation Ameriprise Financial National Planning LPL Financial IBD Elite