What Is an Independent Broker-Dealer, and What Do You Run Yourself?

What makes a broker-dealer “independent”?

“Independent” is not a regulatory category. Every broker-dealer registers with the SEC on Form BD and, before it does business, joins a self-regulatory organization, which for most firms means FINRA. The SEC's Guide to Broker-Dealer Registration sets out those steps. Neither the guide nor the FINRA rulebook defines an independent broker-dealer. The guide is explicit on one point: a broker-dealer must supervise the securities activities of its people whether state law treats them as employees or as independent contractors.

The label describes how advisors are affiliated with the firm:

• Advisors are usually independent contractors, not employees. They run their own practices, usually under their own business name, and affiliate with the broker-dealer for registration, supervision and a platform.
• The firm is usually not owned by a bank or a wirehouse. Ownership varies, and Form BD discloses it. A few large firms run an independent-contractor unit beside an employee one. Continuum's data counts Wells Fargo Advisors Financial Network and Raymond James Financial Services in the independent channel for that reason.
• Advisory business usually runs through the firm's own RIA. Some firms also let advisors run advisory business through an RIA of their own alongside the brokerage registration, an arrangement often called a hybrid RIA.

By investment adviser representatives (IARs) registered at the start of the latest 12-month window, LPL Financial is the largest, followed by Cetera and Osaic. The counts are on Continuum's Firm Churn report.

Before anyone pitches you, three things about any firm are public and quick to check:

• Its owners, the types of business it conducts and its disclosure history, on BrokerCheck, drawn from its Form BD filings.
• Its advisory arm's Form ADV, on the SEC's Investment Adviser Public Disclosure site.
• Its advisor arrivals and departures over the last year, on Continuum's Advisor Flow Index, which is built from the SEC's public registration records.

Where does an independent broker-dealer sit next to a wirehouse and an RIA?

The three structures differ on employment, supervision and what happens to client accounts when you leave. The channel label says nothing about the quality of an advisor's advice.

These rows describe structure. The document that governs your situation is the agreement you sign, and the rows on accounts and leaving are the ones most often assumed rather than read. Have a securities lawyer read it before you rely on any of this.

For a way to score platforms against each other, see how to compare broker-dealer and RIA platforms.

For the employee model, see the wirehouse explainer; for the rules on each side, see RIA vs. broker-dealer. The Broker Protocol explainer covers what you may take when both firms have signed it.

Who supervises you, and what is an OSJ?

Independence does not reduce supervision. The broker-dealer stays responsible for it; what changes is where the day-to-day review happens. FINRA Rule 3110 requires every member firm to supervise the activities of each associated person, to designate a principal in each office of supervisory jurisdiction (OSJ) and to inspect every OSJ at least annually, on a calendar-year basis. Rule 3110(f)(1) defines an OSJ by what happens there: order execution, custody of customer funds or securities, final approval of new accounts or retail communications, or supervision of other branch offices, among other functions.

At many independent broker-dealers the OSJ is run by an advisor or a larger office with clients of its own. That is a structure, not a red flag, but it has consequences: your business may be approved, and your branch inspected, by someone who serves clients in your market. What is an OSJ? covers the model in detail.

Ask the firm, and then ask an advisor supervised through the same channel:

• Who is my named supervising principal, and does that person serve clients in my market?
• Is my supervision run through the home office or through an OSJ, and can I choose?
• If the OSJ is a large independent business, sometimes called a super OSJ, what does it add beyond the broker-dealer's own services, and what happens to my supervision if it changes broker-dealers or is sold?
• Could my own office become an OSJ if I or someone on my team qualifies as a principal, for example through FINRA's Series 24 General Securities Principal exam, and what would the firm require?
• Which activities need approval before, not review after: advertising, seminars, social media, private securities transactions, alternatives and outside business activities? FINRA Rule 3270 requires written notice to the firm before you start an outside business activity, and firms often add their own approval step.
• What is the stated turnaround on advertising review, and who do I escalate to when it slips?
• If I leave the OSJ but stay with the broker-dealer, what happens to my supervision, my branch registration and my client records?
• Which of my current outside activities and business names will be approved in writing before I move, not after?

What does the firm provide, and what do you run yourself?

The split varies by firm, so treat the table as the question list, not the answer.

Questions that separate one firm from another:

• Which systems are required, which are optional, and which can I replace with my own?
• Which product categories need case-by-case home-office approval, and how long does that take in practice?
• Who is the clearing firm, and is a change of clearing firm or platform planned?
• What happens to my email archive, client files and approved marketing if I leave?
• Which of my clients' account types or holdings would this platform not accept?
• If I sell my practice one day, must the buyer affiliate with the same broker-dealer, and does the firm keep a right of first refusal?

The last question is the one advisors most often ask too late. Ask the firm to walk your hardest household through its onboarding: the trust, the family with accounts at several custodians, the older insurance contract.

What does the movement data show for independent broker-dealers?

Claims about which way advisors are moving are easy to make and easy to check. In the year to October 20, 2026, Continuum's Advisor Channel Flow report counts 1,940 IARs who joined an independent broker-dealer from another channel and 1,113 who left one for another channel, a net gain of 827.

The gain came from every channel but one. Wirehouses were the largest source, a net 314, followed by national broker-dealers at 265 and insurance-affiliated firms at 217. RIA firms ran the other way: 192 IARs left an independent broker-dealer for an RIA firm and 71 came from one, a net loss of 121.

Firm by firm, the picture is uneven. Among independent broker-dealer firms, on the same competitive basis, LPL Financial had the largest net gain, +569 IARs (1,823 arrivals and 1,254 departures), and Commonwealth Financial Network the largest net loss, −504 IARs (57 arrivals and 561 departures). LPL agreed to buy Commonwealth on March 31, 2025 and closed the purchase on August 1, 2025. Commonwealth runs as an LPL subsidiary until its advisors move onto LPL's platform, which LPL said at closing it expected to finish in the fourth quarter of 2026. Until then, Continuum's data counts Commonwealth as its own firm, and its departures here are moves to other firms. Where Commonwealth advisors went follows those moves. Every firm's figures are on the Advisor Flow Index.

Three cautions when you read these numbers, ours included:

• They count IARs, not assets, revenue or households. A firm can gain people and lose production.
• Net flow is not a verdict on quality. A firm on the gaining side can still be wrong for your practice on supervision, products or succession.
• Check whether a block of moves was a choice or a corporate event, such as an acquisition or a platform conversion. Advisor Conversion Watch tracks those.

When is staying where you are the right answer?

Independence is often described as an escape from supervision. It is a transfer of responsibility: for the office, the staff and many decisions your firm makes for you today. That transfer suits some practices and not others, and the test is whether what frustrates you is structural or local.

Staying is usually the stronger answer when several of these are true:

• What you want, whether technology, a marketing approval or a team arrangement, is something your firm could grant, and you have not yet asked for it in writing.
• Your practice relies on what your firm supplies: lending, a bank relationship, research or a service team you do not want to rebuild.
• You do not want to run a business. Outside an employee firm, the lease, the hires and the technology choices are yours.
• Your largest households hold accounts or products that would not move cleanly.
• Your succession plan already runs through your firm, and your clients are ready for it.

Moving deserves serious work when the constraint is structural and no manager can lift it, when you want to own a practice you could sell to someone other than your employer, or when the firm's platform and your service model are in constant conflict.

If you are already independent and weighing another independent broker-dealer, the same test applies. Most of the structure will look familiar, so the decision turns on supervision, service and the platform.

Score your current firm on the same terms as any new one. The decision library covers the next questions, and Broker-Dealer & RIA Platform Search is where Continuum compares specific platforms with you.

Related reading: Broker-Dealer & RIA Platform Search, Compare Broker-Dealer and RIA Platforms, What Is an OSJ?.