The Financial Professionals Coalition: Join Us Today

March 8, 2023

The FINRA broker-dealer community is in a death spiral:

  • As last reported by FINRA, there are 3,394 "Broker-Dealer Firms Only" and "Dual Broker-Dealer and Investment-Adviser Firms", a two-decade loss of over 1,600 firms or at least 33%
    at Page 14 of "2022 FINRA Industry Snapshot";

  • During the ten year span from 2012 to 2021, the number of "Broker-Dealer Firms Only" declined from 3,545 down to 2,914, a one decade loss of 631 firms or roughly 18%
    at Page 15 of "2022 FINRA Industry Snapshot";

  • During the five year span from 2017 to 2021, the number of FINRA Small Firms (150 or fewer registered representatives) dwindled from 3,353 to 3,048, a half-decade loss of 305 firms or roughly 9% at Page 14 of "2022 FINRA Industry Snapshot"

As dire a picture as the above statistics paint, one can only imagine the further devastation caused by the Covid pandemic during the uncounted months of 2022 to the present. It appears inevitable and inexorable that the total number of FINRA Small Firms and then the overall number of FINRA member firms will soon fall under 3,000.

Smaller FINRA firms face an existential threat given their historic reliance on revenues from retail commissions and market-making profits. Exacerbating the smaller firms' survival is that the industry's self-regulatory organization, FINRA, appears captive to its Large Member Firms. As with the creation of a Black Hole, the FINRA community is collapsing into fewer but larger firms; and after the inevitable Big Bang, Wall Street will likely be a place with a few, very large, powerful brokerage firms.

Many FINRA Small Firms fled the imploding broker-dealer model for that of the Registered Investment Advisor ("RIA"); and others morphed into private equity firms, family offices, hedge funds, or whatever newfangled business models have and may yet emerge. Amid this exodus from the FINRA broker-dealer model, there are rumblings in the RIA sector as Robo-Advisors grab a greater market share -- which likely portends dramatic slashes to the traditional RIA management fee, and that will likely put the RIA community into a similar existential struggle as that now being fought by the FINRA community. From pillar to post. Out of the frying pan into the fire.

The Financial Professionals Coalition was founded out of a sense that the above-cited industry evolution -- the ripple effect -- puts enormous personal and professional stresses on the industry's small-firm entrepreneurs and their employees. The Coalition is a resource for the 1.2 million-plus folks who work at banks, broker-dealers, hedge funds, mutual funds, RIAs, and the rest of the industry's emanations. The Coalition is designed to serve as a clearinghouse of resources in order to help industry professionals navigate their careers, and to provide such services on a diverse and inclusive basis.

The Coalition reached out to veteran industry lawyers, recruiters, reps, and techies. After accessing the networks of our Founders, and then the networks of their networks, the Coalition plans to attract new members and then plug into their networks. Our goal is to take your query and find someone who will set aside the time to talk to you and offer you guidance. We will help you get answers; but also help you come up with the questions that you need to ask.

We're not offering legal counsel but may refer you to a lawyer, expert witness, or consultant.

If you're a candidate looking for a new job or you're a firm looking for staff, we may refer you to a recruiter or an organization that's hiring.

We will put you in touch with website developers and social media consultants to help you figure out likely costs of marketing your new business or expanding your current footprint.

Much of what prompted the creation of the Financial Professionals Coalition is anger . . . there's just no escaping that fact. Ask small firms and associated persons about their dealings with FINRA, and you will hear tales about gotcha regulation and regulatory speed traps seemingly designed to generate fines.

The FINRA community's employees (be they an actual "employee" or a 1099 Independent Contractor) are wholly disenfranchised at FINRA, with no vote on anything and no Governor's seat on the Board is designated solely for an associated person or registered representative. Voiceless and vote-less, the industry's associated/registered persons fear calling FINRA for guidance or help because the self-regulatory-organization is captive to the interests of its employer-member-firms. FINRA's rulebook reflects the influence of its larger, employer firms. FINRA's regulatory priorities shamefully fail to address workplace racism, sexism, and many predatory employment practices.

FINRA Small Firm Member employers have been gerrymandered out of a fair, proportionate voice on FINRA's lackluster Board of Governors. Although Small Firms represent 90% of FINRA's membership, they have less than 13% of the seats on the Board. And the effort to socially engineer the smaller firms into oblivion continues unchecked.

Making matters worse, some who serve on FINRA's Board or its committees often seem more interested in burnishing their resume or marketing their business. Promises were made to help the industry's beleaguered small firms or associated persons, but those promises are never kept. Inexplicably, FINRA Governors often pursue service on other boards (likely with stipends or honoraria), and, oddly, several Governors are frequently characterized as "Retired" or of a "Former" status; see, The self regulation of Wall Street ought not be a part-time endeavor, and FINRA Governors should be required to devote their full attention to the task of regulation. Service on FINRA's Board must be more than a mere sinecure -- it is an important role requiring competency and effort.

The Financial Professionals Coalition embraces the need for fair regulation. The public is entitled to effective regulation. The industry must keeps its own house clean and in order. The Coalition will not take on the role of an apologist for the misdeeds of the industry. To that extent, the Coalition welcomes the participation of both industry and investor advocates. We aim to set a large table with seating for everyone involved in the financial services community.

The Financial Professionals Coalition's goal is to enhance the professionalism of the men and women who work in the industry. We are open to all ideas. We know that there will always be differing views and internal dissent among our members, but we encourage robust debate and the clash of ideas in the marketplace. That's what fosters solutions and innovation. The Coalition is about making a difference, not a buck.

JOIN the Financial Professionals Coalition, Ltd

The Financial Professionals Coalition, Ltd. is the
one-stop, go-to clearinghouse for financial professionals - registered representatives, associated persons, traders, bankers, back-office staff, and owners of broker-dealers and RIAs.
Membership is free. 

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