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Today’s Company-Owned Broker-Dealer Market Shifts

Author

Phillip McGarry, PhD
Senior Research Analyst in Distribution Research
LIMRA and LOMA
pmcgarry@limra.com

July 2026

Over the past two decades, LIMRA has conducted the Broker-Dealer Sales Survey (the Survey), which summarizes numbers of registered representatives, assets under management, deposits, premiums and revenue for participating company-owned broker-dealers. 

The 20-year dataset reveals a significant transformation in the company-owned broker-dealer market. Company-owned broker-dealers have moved away from a transaction‑driven model — focused on products that drive revenue by sales activity — toward a more asset‑based, fee‑oriented revenue model — focused on products that drive revenue by asset accumulation and management of accounts.

Specifically, managed and wrap programs have steadily increased as a proportion of total revenue, while mutual funds, variable annuities (VA), and variable life (VL) /variable universal life (VUL) have steadily declined. This transition in revenue composition is likely connected with risk exposure, as volatility (year-to-year change) for managed and wrap programs is consistently lower than for mutual funds, VA, and VL/VUL in the data from the Survey. 

This structural shift is further reflected in rising revenue per registered representative, despite the number of registered representatives declining. Both the shift toward managed and wrap programs and the increase in revenue per registered representative indicate a transition in the company-owned broker-dealer market away from a sales-based model and toward an asset-based, fee-oriented model.

Transaction-Based Products

The company-owned broker-dealers in the Survey are firms that are controlled by insurance companies. Broker-dealers employ registered representatives, a type of financial advisor licensed to sell securities-related products, which are connected to the stock market or other financial markets. The first VA product in the United States was sold by the College Retirement Equities Fund in 1952. Because variable annuity returns depend on the performance of financial markets, the U.S. Supreme Court decided in 1959 that the sale of VA falls under the regulatory oversight of the Securities and Exchange Commission (SEC), rather than insurance regulatory agencies. Hence, registered representatives today are licensed and regulated by the SEC and the Financial Industry Regulatory Authority (FINRA).

VL and VUL offer benefits that are also dependent on the performance of financial markets, and thus require a registered representative to purchase. Mutual funds, however, have always been regulated by securities regulators, first being sold in the U.S. in 1924. Mutual funds seek to mitigate the risk of investment in stocks and bonds by pooling investments with many other investors and through a diversity of investments managed by a registered representative.

Over the past 20 years, transaction-based products — VA, VL, VUL, and mutual funds — have declined as a share of total revenue in the Survey data. These products generate revenue largely based on sales and are, therefore, much more vulnerable to fluctuations in markets. Focusing on asset-based products, which generate revenue by fees associated with account management, introduces stability into company-owned broker-dealer revenue.

Managed and Wrap Programs

Managed and wrap programs were first sold in the U.S. in 1975 as separately managed accounts (SMA) by E. F. Hutton. Originally designed to combine trading, managing and advising under one fee, these programs eventually expanded to not only include managing stocks and bonds, but also mutual funds and exchange-traded funds.

Managed and wrap programs generate revenue from ongoing fees and long-term client relationships rather than by sales, and are, therefore, more stable sources of revenue resistant to market volatility and rapid fluctuations. In the past two decades, revenue from managed and wrap programs has contributed larger portions as a percentage of total revenue of company-owned broker-dealers in the 20-year data from the Survey.

Figure 1. Product Revenue as a Percentage of Total Company-Owned Broker-Dealer Revenue


Filter the data in this chart by clicking on a color bar in the chart legend.

Registered Representatives

The shift away from mutual funds, VA, and VL products, which generate revenue by sales transactions, and toward managed and wrap programs, which generate revenue by asset management and associated fees, means that fewer registered representatives are required to generate total revenue. Managed and wrap programs do not rely on continuous initial sales transactions and avoid inefficiencies associated with unsuccessful sales activity (i.e., lost effort and resources). Therefore, fewer registered representatives can generate the same revenue through asset management that a larger number of registered representatives can generate through sales. In the Survey data, this trend emerges in the reduction of registered representatives and the increase in revenue per registered representative over time.

Figure 2. Registered Representatives and Revenue per Representative

Filter the data in this chart by clicking on a color bar in the chart legend.

A Structurally Different Market

With the insights from the data collected in the Broker-Dealer Sales Survey, the company-owned broker‑dealer market that emerges today looks structurally different from the one that existed two decades ago. Revenue has become more persistent, more asset‑driven, and more closely tied to long‑term client relationships.  Managed and wrap programs now generate a larger share of revenue, providing greater stability, while mutual funds and insurance products play a more limited role. Fewer registered representatives account for a larger portion of revenue, as the revenue per registered representative has steadily increased.

 

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