By John Filar Atwood
In its latest annual industry snapshot, FINRA reported that the total number of registered firms continued its steady five-year decline, from 3,726 in 2017 to 3,394 in 2021. Similarly, the number of registered representatives dropped to 612,457 from its recent high of 630,235 in 2017. The aggregate revenues for registered firms trended upward in 2021, reaching $391 billion, slightly better than the recent best of $388 billion in 2019.
FINRA reported the numbers in its industry snapshot report, which is designed to increase public awareness and understanding of FINRA-registered firms and individuals. The statistical report provides a high-level overview of the industry, and only reports data in the aggregate to protect the confidentiality of individual firms.
FINRA regulates brokerage firms doing business with the public in the U.S. Of the 3,394 FINRA-registered firms in 2021, 2,914 were registered just as broker-dealers and 480 were dually registered as broker-dealers and investment advisers. In the report, FINRA noted that the number investment adviser-only firms in 2021 was 31,669.
Mostly small firms. The majority of FINRA’s oversight is with small firms, as they comprise 3,048 of the total number of registered firms. Mid-sized firms slightly outnumbered large firms in 2021 at 185 and 165, respectively.
Of the more than 612,000 registered representatives overseen by FINRA in 2021, 81 percent (510, 191) worked in large firms. Mid-sized firms accounted for eight percent of the total (51,008) and small firms employed 10 percent (64,864) of the representatives. According to the report, in 2021 43,896 representatives left the industry, and 38,822 entered the business.
Total revenues. The trend in total revenues generally has been upward in recent years for registered firms, FINRA reported. In 2017, firms totaled $305.7 billion in revenues with $268,632 in expenses. After a slight decline from $388 billion in 2019 to $362 billion in 2020, revenues rose to $398.5 billion in 2021 with $306.8 billion in expenses. The $91.7 billion in net income was the highest reported level in recent years.
FINRA noted that the report included several new data points, including information about special purpose acquisition companies, customer margin debt, and the Consolidated Audit Trail. Other newly-added sections of the report are American Depository Receipt activity, excess net capital by firm size; Reg. NMS stock trading by product type, and geographic distribution of registered individuals.