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 2018 by Assets Under Management|
|Fidelity Investments||$6.85 trillion|
|Charles Schwab||$1.85 trillion|
|Wells Fargo Advisors||$1.6 trillion|
|TD Ameritrade||$1.3 trillion|
|Edward Jones||$1.10 trillion|
|Raymond James Financial||$754 billion|
|AXA Advisors||$665 billion|
|LPL Financial||$669 billion|
|Ameriprise Financial||$485 billion|
|Commonwealth Financial Network||$156 billion|
|Northwest Mutual Inv. Services||$132 billion|
|Cambridge Investment Research||$99 billion|
|Securities America||$86 billion|
|Waddell & Reed||$80.2 billion|
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.