The reversal reflects the wealth management industry’s
Over the last decade, revenue trends tracked in Financial Planning’s annual FP50 survey display why executives and experts refer to an industry going through a transformation.
Fee-based revenue makes up 43% of the firms’ revenue, nearly twice its 23% share of the mix in 2007. During the past ten years, fee revenue at the 50 largest IBDs has soared by 264% to more than $11 billion. At the same time, commissions have expanded by 21% to $10.9 billion.
The Department of Labor’s fiduciary rule, which was formally proposed in 2016, accelerated the shift in recent years. In fact, commissions have fallen each of the past three years, while fee-based revenue has grown.
The
Indeed, several IBDs are galloping ahead of the pack by getting most of their revenue from fees, which experts point out are a more reliable source than the varying levels of product sales. Major
Both firms made the list of top 10 firms ranked by percentage of fee-based revenue as a share of their overall revenue. Ameriprise, the No. 2 IBD, constitutes the largest firm to make the list. The firm’s advisory services have boosted its total fee revenue above all other firms.
None of those large firms, however, brought in the industry’s No. 1 fee-based mix. Those bragging rights go to a mid-sized IBD based in Centennial, Colorado. The list comes from the share of each firms’ 2017 revenue attributable to fees rather than commissions or other forms of revenue.
To see how the firms stack up, click through our slideshow. To view the top 25 firms sorted by total revenue,
10. KMS Financial Services
Commission revenue: $43,733,000
Other revenue: $9,413,000
Total revenue: $108,414,000
FP50 ranking: #42
Fee revenue as % of total revenue: 51.0%
Fee revenue as % of total revenue ranking: #10
9. Kestra Financial
Commission revenue: $187,624,000
Other revenue: $42,231,000
Total revenue: $475,418,000
FP50 ranking: #14
Fee revenue as % of total revenue: 51.7%
Fee revenue as % of total revenue ranking: #9
8. Ameriprise
Commission revenue: $1,199,834,000
Other revenue: $727,570,000
Total revenue: $4,259,992,000
FP50 ranking: #2
Fee revenue as % of total revenue: 54.8%
Fee revenue as % of total revenue ranking: #8
7. United Planners Financial Services
Commission revenue: $48,178,000
Other revenue: N/A
Total revenue: $110,946,000
FP50 ranking: #40
Fee revenue as % of total revenue: 56.6%
Fee revenue as % of total revenue ranking: #7
6. Cambridge Investment Research
Commission revenue: $259,820,000
Other revenue: $91,779,000
Total revenue: $811,396,000
FP50 ranking: #7
Fee revenue as % of total revenue: 56.7%
Fee revenue as % of total revenue ranking: #6
5. Lincoln Investment Planning
Commission revenue: $121,296,000
Other revenue: $10,435,000
Total revenue: $309,700,000
FP50 ranking: #21
Fee revenue as % of total revenue: 57.5%
Fee revenue as % of total revenue ranking: #5
4. Commonwealth Financial Network
Commission revenue: $245,870,000
Other revenue: $197,407,000
Total revenue: $1,241,572,000
FP50 ranking: #4
Fee revenue as % of total revenue: 64.3%
Fee revenue as % of total revenue ranking: #4
3. Northwestern Mutual
Commission revenue: $225,865,000
Other revenue: $91,097,000
Total revenue: $945,412,000
FP50 ranking: #6
Fee revenue as % of total revenue: 66.5%
Fee revenue as % of total revenue ranking: #3
2. PlanMember Securities
Commission revenue: $25,320,000
Other revenue: $600,000
Total revenue: $85,648,000
FP50 ranking: #47
Fee revenue as % of total revenue: 69.7%
Fee revenue as % of total revenue ranking: #2
1. Geneos Wealth Management
Commission revenue: $25,721,000
Other revenue: $4,055,000
Total revenue: $111,914,000
FP50 ranking: #39
Fee revenue as % of total revenue: 73.4%
Fee revenue as % of total revenue ranking: #1