A broker-dealer firm is one that processes orders for clients but also executes trades for its own benefit. In other words, it is a broker when it trades for clients and it is a dealer when it buys and sells for itself. (See also: What Is a Broker-Dealer and Why Should You Care?)

There are two types of broker-dealers: (1) A wirehouse is a firm that sells its own products to customers; and (2) An independent broker-dealer sells products from outside sources.

The purpose of ranking the top 25 broker-dealer firms is to provide you with a reference for the most established and stable companies in this field. There are more than 3,869 broker-dealers to choose from, according to the Financial Industry Regulatory Authority, or FINRA.

It is nearly impossible for an individual to research each individual broker-dealer given the vast numbers that exist. You must narrow your focus. One way to do that is to look at broker-dealers that attract a lot of money from clients. This can be an indication that a broker-dealer has performed well.

We have compiled a list of the top 25 broker-dealer firms based on assets under management (AUM). All facts and figures are current as of September 27, 2017.

We avoided ranking broker-dealers by the number of advisors in the firm, because this figure does not tell us how much money the firm handles. For those who want to play it safe and use a broker that has a significant presence, this list is a good starting point.

Top 25 Broker-Dealers

  1. Fidelity:                                                                         $5.4 trillion
  2. Charles Schwab:                                                            $2.7 trillion
  3. Edward Jones:                                                               $800 billion
  4. Ameriprise Financial:                                                        $800 billion          
  5. TD Ameritrade:                                                              $600 billion
  6. Raymond James Financial:                                              $600 billion
  7. AXA Advisors:                                                                   $540 billion
  8. LPL Financial:                                                                   $530 billion
  9. National Planning Corporation                                      $509 billion
  10. Wells Fargo Advisors:                                                       $490 billion
  11. Commonwealth Financial Network                               $114 billion
  12. Northwest Mutual Investment Services:                            $100 billion
  13. Cambridge Investment Research:                                    $85 billion
  14. Waddell & Reed:                                                               $81 billion
  15. Transamerica Financial:                                                   $79 billion
  16. Securities America:                                                           $70 billion
  17. Commonwealth Equity:                                                     $60 billion
  18. Voya:                                                                                $38 billion
  19. MML Investor Services:                                                    $25 billion
  20. Lincoln Investment:                                                           $23 billion
  21. First Allied Securities:                                                       $23 billion
  22. Cetera Advisor Networks:                                                 $15 billion
  23. Securities Service Network                                               $14 billion
  24. Kestra Investment Services:                                             $12 billion
  25. NFP Advisor Services:                                                       $12 billion

Mergers and acquisitions were a hallmark of the broker-dealer space in 2016, and many expect extensive M&A action for the foreseeable future. This is due to a new Department of Labor Fiduciary Rule. We expect the list of the top 25 broker-dealers to change throughout 2017. (See also: Trump Orders Review of Dodd-Frank, Repeal of Fiduciary Rule.)

It must be said that it is not wise to choose a broker-dealer based on assets under management alone. Other factors, such as a track record of significant returns for clients, should be considered.

Another consideration when selecting a large broker-dealer is personal attention. Large firms can have many advisors working for them. Make sure you select an individual advisor who has time to examine your financial needs in detail, return calls promptly and suggest investments that are suited to your goals. 

You should always check the status of a broker-dealer with FINRA. This organization is the watchdog for broker-dealers, and regularly investigates dealing. FINRA may also fine companies that misbehave. Check the FINRA site to see if a firm you are interested in has made any missteps.

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