Jump to Winners | Jump to Methodology
InvestmentNews recognizes the independent 5-Star Broker-Dealers of 2024 who have been honored after a comprehensive 10-week nationwide survey.
A list of the Top 10 Broker-Dealers has been compiled across each of these categories:
revenue
fees
account assets
average payout per producing rep
IN’s data shows a significant change in the structure of independent broker-dealers in the decade from 2013 to 2023.
Those working on commission have dropped by 26 percent, while those operating on a fee model have increased by 20 percent.
The comparison between IN’s 2023 and 2024 report data also shows how the different revenue segments have changed:
Revenue: 9.9 percent
Commissions: 4.6 percent
Fees: 5.6 percent
Other: 33.6 percent
The San Diego-based firm quite literally does what it says on the tin. Its founding partners all worked at industry behemoths but wanted to go in a different direction.
“We developed the business plan to go back to true independence,” explains David Fischer, co-founder and CMO. “We focus on service, picking up the telephone, taking care of the advisors, rather than these large firms where we worked in the past that have created call centers and outsourced to different countries. There’s not any type of push in terms of making them sell something or having certain bars to hit. We don’t want them to feel pressured.”
Part of the effectiveness is having a strong back office that delivers personalized attention to their advisors.
Fischer adds, “We enable them to work in the best interest of the clients, and also the best interest for them to really enjoy the fruits of their labor and be entrepreneurial.”
For the model to work, the choice of personnel is key. That’s why IFG prioritizes quality over quantity.
“A lot of broker-dealers are fixated on numbers of advisors, but we go after a little bit more of the higher-quality folks, the more experienced, the higher producers. We’ve done that by recruiting them one at a time,” shares Fischer.
This has resulted in IFG being ranked in eighth place in IN’s Average Payout Top 10 of 2024, which is notable considering the firm has around 550 reps compared to competitors who have over 2,000.
However, as the model is to select the best of the best, that becomes harder as Fischer over time drains the talent pool.
“At one point, they called me the King of Recruiting. I’ve been doing this a long time, so there is a method to my madness. Obviously, we’ve a great story to tell and if you can get that out there, it resonates and you build those relationships like we have, you get a lot of connections,” he says.
They often get calls from insiders advising that someone isn’t happy and would be a perfect fit. Other times they may target someone who they feel would be an asset.
Once someone is on its radar, IDF rolls out the red carpet and does not copy other broker-dealers by simply sharing a website or a few leaflets.
Fischer says, “We get them on the phone and send them a beautiful package. I take great pride in the recruiting kit. It’s very informative and we get a lot of compliments on it. Once they get that package it’s like, ‘Oh, my gosh. These guys do it first class.’ The next step is ‘Let’s bring him into sunny San Diego,’ and usually when they come here, we sign them up. We have a very high close ratio.”
Operating like a family is what enables the Fort Lauderdale firm to stand apart.
Co-founder and chairman Brian Kovack comments, “We’re not owned by private equity or an insurance company. We’re privately owned, and providing a quality of experience to the advisors is more important than how big we are or the bottom line.”
With approximately 400 advisors, the commercial return is important but is not the driving force.
Selecting the Kovack Securities team rests on a methodical approach that builds on the industry’s three pillars of:
licensing
education
experience
“There’s one that’s more important than those three and it’s one you can’t measure. That is the general attitude, demeanor, and personality of the individual,” says Kovack. “We bring in people who are energetic, successful, and happy, who really want to treat others the way they want to be treated [themselves]. We think of that as the golden rule.”
Part of the family environment is that the firm pays 100 percent of the costs, with no strings attached, for its people to get licensed or receive a designation such as CFP or CFA.
Kovack adds, “We’ve had an internship program for 15 years and had over 40 interns over the period. By the time they finish college, they have the option to seek full-time employment here. We start young and teach them how we do things and how customer service is so important.” The firm’s CFO, Isabelle Shick, is a product of the internship program.
Further illustrating the cohesive unit that has been formed, the average employment duration is 17 years.
Keeping productivity high is fine-tuned by the firm’s option of technological choices. As a relatively young firm at 27 years old, Kovack Securities has benefited from leasing arrangements.
“Compared to our competitors in the independent broker-dealer space, we’re very fortunate that we started in the late ‘90s, and were always able to outsource and didn’t have to design and develop our own proprietary technology,” explains Kovack.
This allows the firm to regularly change and utilize what benefits its advisors the most.
“It’s well agreed upon that technology built today is obsolete in five years, and we have the ability to plug and play if one vendor is no longer providing best-of-breed technology. That allows us to provide those tools to the advisors and then they are passed along to the customers,” he says.
Both Independent Financial Group and Kovack Securities, Inc. have deliberately created an environment that not only enables them to succeed commercially but match the identity they seek.
Kovack says, “Here, the staff actually know the names of the individuals they're servicing and also, there’s the ability for advisors to have access to senior management.”
And he continues, “It’s a differential we have that a lot of firms don’t because it’s an impossibility for them with thousands of advisors and employees.”
This is echoed at IFG, which places a premium on work-life balance. Due to the founders’ extensive industry experience, they were aware of the need for it.
At the firm’s four annual conferences, partners and children are welcome.
“We had a recent one in London. We invite the families, we invite the spouses, and there were 140 children there, which is really unusual,” explains Fischer. “We say, ‘Invite everybody and make it a family affair.’ That’s really resonated and worked well for us. We’re very much a community with our advisors, it’s collaborative.”
The four conferences have guest speakers to make it enjoyable for all, featuring names such as NBA legend Magic Johnson and hero pilot Chesley “Sully” Sullenberger.
IFG also has a commitment to charity in an extension of its culture and over the past 12 months has partnered with:
Promises2Kids
Challenged Athletes Foundation
Mitchell Thorp Foundation
Despite being honored by IN, each firm has the ambition to continue developing on its own terms.
IFG plans to spend $3 million on a tech upgrade.
Fischer says, “It’s not about me and the other partner scraping a bunch of money off the table. It’s about putting it back, so we can keep building and make this a perpetually successful company where everybody is happy and growing.”
Kovack has an eye on the future but will remain true to the business model.
“We have a very good history of controlled methodical growth. We’re not seeking to be a huge monolithic entity with thousands of advisors. Our growth is consistent and that allows us to continue to provide a high level of service,” he says. “So, we’ll be pretty steady adding advisors each year in a controlled manner that allows us to maintain those high standards.”
Scroll down to see the top 10 independent broker-dealers of 2024 based on metrics such as fees, payout, account assets, and revenue.
Firms participating in InvestmentNews’ annual survey of independent broker-dealers provided comprehensive financial data for 2023. The data presented in this report was based on a voluntary survey conducted between February 7 and April 19, 2024, and included revenue, fees, assets, and staffing across various categories. The top winners were determined by their ranking on metrics such as revenue, fees, account assets, and average payout per producing rep.
