The independent broker/dealer (IBD) channel has seen the greatest amount of consolidation over the last three years, significantly increasing the scale and capabilities of the largest IBD firms. Year over year, the channel led growth in advisor-managed assets, achieving growth of more than 21%— ahead of captive B/Ds and registered investment advisors (RIAs), according to The Cerulli Report—U.S. Broker/Dealer Marketplace 2025.

Driven by industry consolidation, the IBD channel now controls nearly one-fifth of all financial advisor headcount and 16% of total industry assets. “Assets and advisors have increasingly become concentrated in the hands of the very largest IBDs,” comments Michael Rose, director. “The top 25 largest B/D firms control more than 80% of all B/D channel assets.”

The competitive dynamics in the marketplace have changed considerably as a result. The total number of IBDs operating has declined by more than one-third over the last decade, reducing from 124 as of year-end 2014 to 79. “We believe that mid-tier IBDs could be challenged to match the platform capabilities and resources offered by the largest firms, especially with the investments in platforms and home-office support capabilities the larger firms are able to offer,” adds Rose.

Cerulli’s research indicates that advisors are drawn to independent affiliation models (including IBDs and RIAs) by the higher payout (91%), the ability to build financial value in an independent business (75%), and greater autonomy (73%). If mid-tier IBDs remain nimble and focused on their unique value propositions, and make investments to strengthen them, Cerulli believes that there remains a place in the marketplace for firms of this size, though the competitive environment is becoming more challenging. “Many IBD advisors prefer smaller, more boutique cultures, and the ability to have a direct line to senior decision makers,” he concludes.