Number of brokerages, reps registered with Finra falls again

Despite the declining number of participants, industry revenue and profit increase

Oct 2, 2019 @ 4:49 pm

By Mark Schoeff Jr.

The number of brokerage firms and their representatives regulated by Finra fell again last year, but industry revenues and income increased.

The second annual Finra Industry Snapshot shows that the number of Finra-registered representatives was 629,544 in 2018, down from 630,273 in 2017. It was the third straight decline since 2016, when there were 639,457 registered reps.

In 2018, there were 3,607 brokerage firms registered with the Financial Industry Regulatory Authority Inc. That total was down from 3,726 in 2017 and marked the fourth time since 2014 — when 4,067 firms were registered — that the number declined.

Even though there are fewer participants in the brokerage industry, they made more money last year.

Total revenues for Finra-registered firms totaled $357 billion in 2018, up from $305 billion in 2017. Total expenses increased from $268 billion to $314 billion, while pretax net income increased from $37 billion in 2017 to $43 billion in 2018.

"The Snapshot is designed to provide visibility into the broad range of firms, individuals and trading activity that Finra oversees," Finra chief economist Jonathan Sokobin said in a statement.

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Among the financial advisers Finra regulates, 53% — 334,860 — are registered only as broker-dealers, while 47% — 294,684 — are dually registered as brokers and investment adviser representatives.

Small firms dominate the Finra ecosystem. Last year, 3,242 of the 3,607 Finra-registered brokerages had between one and 150 registered representatives, fitting Finra's definition of "small." There were 192 midsize firms (between 151-499 registered reps) and 173 large firms (500 or more registered reps).

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The number of Finra small firms has declined in each of the last four years — falling from a total of 3,683 in 2014 to 3,242 in 2018.

The number of midsize and large firms remained relatively stable between 2014 and 2018, with midsize firms falling from 206 to 192 and large firms falling from 178 to 173.

Large brokerages employed 82% of Finra-registered representatives — 523,169 – in 2018. Small firms employed 10% — 66,241 – and midsize firms employed 8% — 52,456.


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