The money stream is flowing again. After two years of stagnant or shrinking revenue, the 50 largest independent broker-dealers reported that annual revenues rebounded last year.
Financial Planning's 26th annual ranking of the top 50 independent broker-dealers showed a median increase in revenue of 13.2%, with 13 of the firms posting year-to-year growth of more than 20%. A robust stock market and strong demand for mutual funds, annuities and other products helped the upswing.
Lincoln Investment Planning was the fastest-growing broker-dealer, with a 63.6% leap in revenue. Lincoln was followed by Triad Advisors (50.2%), American Portfolios Financial Services (43.8%) and CFG/H. Beck (42.9%). All four had 2010 revenues of less than $100 million.
But the next two fastest-growing firms are top 10 broker-dealers. Wells Fargo Advisors Financial Network's revenue jumped 40.9%, to $434.2 million, and Cambridge Investment Research — which was the fastest-growing broker-dealer on last year's list with a modest 3.2% revenue rise — posted an increase of 36%, to $339.3 million. Cambridge fell just short of the top 10, settling at No. 11.
The industry turnaround is dramatic. Just three FP50 firms increased their top line last year, and the year before was only slightly better, with 11 firms reporting positive revenue growth. By comparison, 44 of the top 50 broker-dealers on this year's list reported growth.
"Some of last year's strength resulted from the weakness of the two previous years," says Cambridge Chairman and CEO Eric Schwartz. "It's easier to post good numbers when you're coming back from bad years."
"Economic difficulties led to layoffs and retirements," says Art Grant, CEO and president of Cadaret Grant. "Those events in turn led to rollovers and repositioning assets."
"In addition," Grant said, "there is disillusionment with wire houses and their well-publicized troubles in the past several years. That presents opportunities for mainstream conservative planning-oriented advisors."
Financial Planning surveys independent broker-dealers about their annual revenues, commission and fee revenue.
