Securities Brokerages Industry Profile

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.

Many large US-based brokers, particularly those affiliated with major banks and financial services companies, operate internationally from offices in the UK and China, among other places. Top global securities brokers include Deutsche Bank (Germany), Macquarie Group (Australia), and Credit Suisse and UBS AG (Switzerland).

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.

The traditional brokerage industry that sold stocks to individual investors has largely evolved into companies that either broker large stock trades for institutional investors or sell a variety of investment products to individuals. Instead of buying individual securities, many individuals now invest in mutual funds.

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 ...