Securities Brokers

Industry Profile Report

Dive Deep into the industry with a 25+ page industry report (pdf format) including the following chapters

Industry Overview Current Conditions, Industry Structure, How Firms Operate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.

Call Preparation Call Prep Questions, Industry Terms, and Weblinks.

Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.

Industry Profile Excerpts

Industry Overview

The 8,300 investment banking and securities brokerage companies in the US generate revenue through securities underwriting and origination, managing securities markets, brokering securities for clients, and buying and selling securities on their own accounts. Firms charge asset management fees, earn commissions and transaction fees on client trades, and earn net interest revenue (difference between interest earned and brokerage interest expense) and fees for providing financial planning and advisory services. Firms may also receive “payment for order” for directing trades through a particular exchange or channel.

Regulated Environment

Investment banks and securities brokerages are highly regulated at the federal and state level.

Cyclical Performance

The investment banking and securities brokerage industry is cyclical with performance tied to the stock markets and influenced by domestic and global economic factors.

Growth in Self-directed Investors and Online Brokerage

The popularity of self-directed and online trading continues to grow, driven by investors’ increasing desire for control.

Industry size & Structure

The average investment banking and securities brokerage firm operates out of two to three locations, employs 54 workers, and generates $36 million annually.

    • The investment banking and securities brokerage industry includes 8,300 firms that employ about 451,000 workers and generate about $296 billion annually.
    • The industry is highly concentrated; the top 50 companies account for over 85% of industry revenue.
    • Large investment banking companies include Morgan Stanley, Goldman Sachs, JP Morgan Chase, Bank of America, and Vanguard. Large securities brokerage firms include Charles Schwab, TD Ameritrade, StoneX, and Merrill Lynch. Large firms may have a global presence.
                                  Industry Forecast
                                  Securities Brokers Industry Growth
                                  Source: Vertical IQ and Inforum

                                  Recent Developments

                                  Jul 11, 2024 - Firms Raise Fees
                                  • Investment bankers and securities brokers slightly increased their prices during the first quarter of 2024, according to the US Bureau of Labor Statistics (BLS). Investment banking and securities brokerage industry employment decreased slightly during the first quarter of 2024 while average wages for nonsupervisory employees increased slightly, according to the BLS.
                                  • Extreme working hours and poor work-life balance for junior bankers at major investment banks have come into focus following the recent deaths of two Bank of America employees, according to Forbes. The investment banking industry has long been criticized for its intense work culture, with junior bankers often feeling pressured to work over 100 hours per week to impress managers and advance their careers. They are frequently assigned mundane, time-consuming tasks that keep them at the office late into the night, while senior dealmakers leave earlier, according to Forbes. Young investment bankers are increasingly being hospitalized with heart conditions, according to Business Insider. Dr. Arjun Ghosh, a London cardiologist, said that he has seen a 10% increase in cardiac arrest among bankers under the age of 30 in the last decade.
                                  • Wall Street firms are expected to hand out bigger bonuses in 2024 due to rebounds in investment banking, equity markets, and fixed income trading, according to financial services compensation firm Johnson Associates. Investment bankers helping companies issue debt are expected to see the highest bonus increases this year -- from 15% to 25% -- as companies sell record volumes of debt. Incentives in investment banking are still far from their peak in 2021, however. The only finance sector segment where pay is above the 2021 level is private equity, but the workforce at these companies is considerably smaller than in banks, according to Johnson Associates.
                                  • The US Securities and Exchange Commission (SEC) issued a notice of proposed rulemaking that would require SEC-regulated investment advisers, investment companies, and broker dealers to notify individuals affected by certain types of data breaches, along with other related requirements. The SEC currently does not require covered entities to notify affected individuals in the event of a data breach. Covered entities generally respond to data breaches according to applicable state data breach notification laws. The proposal would also require covered institutions to develop, implement, and maintain written policies and procedures for an incident response program that is reasonably designed to detect, respond to, and recover from unauthorized access to or use of customer information. A response program would include procedures to assess the nature and scope of any incident and to take appropriate steps to contain and control the incident to prevent further unauthorized access or use.
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