Securities Brokerages Industry Overview

Excerpt from Securities Brokerages Report

The securities brokerage industry in the US includes about 7,500 companies with combined annual revenue of about $145 billion. Major companies include Charles Schwab, Edward Jones, and brokerage units of large financial services companies such as Morgan Stanley, Goldman Sachs, and Citigroup. The industry is highly concentrated: the top 50 companies account for more than 80 percent of revenue.

Competitive Landscape

Demand is driven by the returns of securities markets relative to alternative investments. The profitability of individual companies depends on efficient operations and good marketing. Large companies have economies of scale in operations and high name recognition. Small companies can compete effectively by offering better customer service. The industry is capital-intensive; average annual revenue per employee is more than $500,000.

Products, Operations & Technology

Major services are stock brokerage, investment advice, brokerage of bonds and derivatives, and the brokerage of mutual funds. Financial planning services account for a third of industry revenue, stock brokerage for a quarter, and financing for about 10 percent. The remaining revenue is comprised of income from brokerage of investment securities, derivatives, and other fees.