Fastest growing independent brokerages in wealth management

IBD Elite 2024: The 10 fastest growing independent brokerages

September 4, 2024 1:58 PM

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The largest independent brokerages in wealth management are reaping gains from their scale advantage, but some of their midsize rivals are thriving as well.

In the rankings below of the fastest growing firms in the channel, giant companies LPL Financial, Cetera Financial Group, Northwestern Mutual, Commonwealth Financial Network, MassMutual's MML Investors Services, Raymond James Financial Services and Cambridge Investment Research occupy seven of the 10 spots. However, smaller competitor LaSalle St. Securities also made the list, as did Level Four Financial and Arkadios Capital — two firms that left the giants as part of financial advisor breakaway moves, creating standalone brokerages.

That dynamic reflects how midsize independent brokerage firms are in some cases expanding in parallel with the biggest players and, in others, selling to fold into them. Succession questions relating to older owners who started their firms in the '80s and '90s and are now "looking at cashing out themselves so that they can retire" are causing many of the M&A deals that are accelerating the consolidation of the channel toward the largest firms, according to Jodie Papike, CEO of independent advisor and executive placement firm Cross-Search. On the other hand, some midsize firms are cutting a different path into sustainable business, she noted.

"They've already thought of that so many years in advance and they have a way to get their capital out of it without having to sell it," Papike said in an interview.

Still, many of the firms are listening to offers "at a certain multiple that they feel is so tempting that they can't refuse it" and shifting away from the idea that they can pass the company "on to the next generation," she added. "Private equity just pumps so much capital into our industry that it's really affected the number of sales we've seen."

Private equity-backed firms such as Cetera are boosting their size, but publicly traded companies like LPL and Raymond James are expanding rapidly, too. Using the capital of its financial backer, Genstar Capital, Cetera completed two of the largest deals in the channel last year with the addition of the retail wealth and trust business of Securian Financial Group and Avantax. At the same time, Raymond James posted new highs in profit and client assets in the second quarter, and LPL is setting records every three months in financial advisor headcount even as two large independent branches have opted to leave the firm.

Scroll down the slideshow for the ranking of the fastest growing independent brokerages in wealth management. And find other features from this year's edition of Financial Planning's IBD Elite study here:

Note: The companies are ranked below by the percentage increase in their annual revenue between 2023 and the prior year, as reported by the companies themselves. FP relies on each firm to state their annual metrics accurately.