A broker-dealer firm 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.
There are two types of broker-dealers. One type is a wirehouse, or a firm that sells its own products to customers. The other type is an independent broker-dealer that sells products from outside sources. There are more than 3,700 broker-dealers to choose from, according to the Financial Industry Regulatory Authority, or FINRA. The purpose of ranking the top 15 broker-dealer firms is to provide you with a reference for the most established and stable companies in this field.
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 start by looking at broker-dealers that attract a lot of money from clients, or have the most assets under management (AUM). This can be an indication that a broker-dealer has performed well.
Here, we've compiled a list of the top 15 broker-dealer firms based on assets under management (AUM) based on the most current numbers available from the companies as of Oct. 25, 2018. 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 15 Broker-Dealers in 2018 (AUM)
- Fidelity Investments: $6.85 trillion (March 2018)
- Charles Schwab: $1.85 trillion (September 2018)
- Wells Fargo Advisors: $1.6 trillion (March 2018)
- TD Ameritrade: $1.3 trillion (September 2018)
- Edward Jones: $1.10 trillion (July 2018)
- Raymond James Financial: $754 billion (June 2018)
- AXA Advisors: $665.5 billion (June 2018)
- LPL Financial: $668.9 billion (July 2018)
- Ameriprise Financial: $485 billion (March 2018)
- Voya: $209 billion (June 2018)
- Commonwealth Financial Network: $156 billion (January 2018)
- Northwest Mutual Investment Services: $132 billion (June 2018)
- Cambridge Investment Research: $99 billion (September 2018)
- Securities America: $86 billion (January 2018)
- Waddell & Reed: $80.2 billion (August 2018)
Please note 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.
In addition, you should always check the status of a broker-dealer with FINRA. This organization is the watchdog for broker-dealers, and it regularly investigates them and documents misbehavior. FINRA may also fine companies that misbehave. To be safe, be sure to check the FINRA's BrokerCheck website to find out if a firm you are interested in has made any missteps.