Free VC Directory
With any B-Plan Purchase
425 Page Capital Directory
Through Apr. 30


Custom Business Plan
$425 Flat Rate
No Templates Used
7 Day Turnaround

All Purchased Plans

Are Updated for 2017


Free VC Directory

With any B-Plan Purchase
425 Page Capital Directory
Through Apr. 30


Custom Business Plan
$425 Flat Rate
No Templates Used
7 Day Turnaround

All Purchased Plans
Are Updated for 2017

Broker Dealer SWOT Analysis

 

Strengths

 

Broker dealers are always able to maintain profitable operations given that they generate income each time a security is bought or sold. In both bull and bear markets, broker dealers are able to earn commissions. In today's world, many people trade several times a day in order to profit from increases or declines in the price of a security. Additionally, broker dealers are now able to generate substantial amounts of secondary income from investment advice as well as ancillary fees including interest from margin loans to traders. For many brokerages, additional income can be earned from trading securities for the company's own account. The barriers to entry for starting a new broker-dealer are relatively low. An individual firm needs to complete Form BD and be approved by FINRA in order to operating in an introducing or underwriting capacity. The startup costs associated with a new broker-dealer firm range from $100,000 to $500,00 depending on the type of brokerage being established.


Weaknesses


Competition among broker-dealers is intense. The large ongoing fees charged to customers has driven a number of competitors into this market. Additionally, prime brokerages now have to compete with their discount brokerage counterparts. This trend is expected to stay in perpetuity. It should be noted that many banks now offer their own in house broking services. The ongoing reporting of this type of business is substantial.

 

Opportunities

 

For many broker-dealers, the fastest way to expand operations is to acquire investment advisory firms (RIAs) or established brokerages in order to expand revenues. It should again be noted that many firms are able to generate substantial fees from proprietary trading for their own account or with dedicated capital from third party investors. Profitable brokerages are easily able to acquire capital in order to fuel their growth.

 

Threats

 

The regulations regarding broker-dealers are constantly changing. As such, it is imperative that these companies maintain extensive legal counsel and accounting advice in order to ensure that the business is operated within the letter of the law at all times. This is the primary threat issued faced by stock brokerage firms. At this time, there is piece of legislation that would impact the way that a broker-dealer operates or how they advertise to their customers.

 


Be sure to take a look at our Business Plan Templates.