Cerulli: Top 25 Firms Control 93% of the Broker-Dealer Market
Likely driven largely by merger and acquisition activity, the broker-dealer marketplace has experienced much consolidation over the past decade-plus. According to Cerulli Associate’s latest report, U.S. Broker/Dealer Marketplace 2024, 93% of broker-dealer channel assets are controlled by the top 25 firms, based on assets under management, and the 10 largest broker-dealer firms have increased their share of broker-dealer adviser headcount to 62%.
As these firms look to sustain their market position, adviser technology will become a strategic imperative and important differentiator, according to Cerulli.
Over the last decade, the largest firms in the channel have seized the opportunity to reinforce their size, attracting more advisers to their platform through technology upgrades and recruitment packages. According to Cerulli, the quality of a broker-dealer firm’s technology has proven to be a pivotal factor both for retaining advisers and luring experienced advisers away from their current firms. Cerulli’s research finds advisers who switched broker-dealer firms within the last three years most frequently identify the quality of a firm’s technology (55%) as a factor that influenced them to join their broker-dealer, just ahead of the quality of back-office support (53%) and compensation (49%).
“Investments in technology and back-office support can significantly enhance a firm’s attractiveness, making it a more conducive environment for advisers to thrive,” says Michael Rose, director wealth management for Cerulli Associates. “As the allure of independent channels – which tend to offer greater autonomy and flexibility – looms as a competitive threat, a technology experience that empowers advisers to provide a high-quality service offering and client experience, and that makes it easy for advisers to run their business efficiently, is a powerful defensive and offensive strategy for broker-dealers.”
As previously reported by AltsWire, large firms like LPL Financial have introduced additional technology and related consulting services to help financial advisers and institutions more effectively manage and grow their wealth management practices. Whether an adviser is looking to evolve technology or optimize existing systems, LPL’s service aims to enhance their tech usage.
Overall, more robust technology infrastructure, better home-office support, and stronger resources for practices operating in a team structure are all factors that can enable scale, allowing advisers to work more efficiently, improve the range and quality of services they offer clients, and retain assets. “However, scale alone is not a guarantor of improved platform capabilities,” says Rose. “Broker-dealers will need to invest in the right technology to empower adviser growth and secure a sustained advantage.”
Headquartered in Boston, Cerulli Associates is an international research and consulting firm that provides financial institutions with guidance in strategic positioning and new business development.
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