November 07, 2022
There are so many brokers in the sea, but which is the one for thee?
For your customers, the choice might be simple — perhaps they’ll take their pick of a bonus when they choose your flavor of brokerage and start trading. But for fintechs and financial services firms, there’s really no picking and choosing when it comes to serving your customers. You’ll have to meet them where they are, no matter how flashy, ancient, gamified, boring, avant-garde, or Millennial it is.
Supporting dozens of brokerages in your app or financial product doesn’t come easy, either. Sure, they’re all finance apps — but while some brokerages are more like a Ferrari, others are more like a Model T, and neither are particularly easy to drive for the unseasoned investor.
That’s why we’ve built a middle-ground to ingest, interpret, and serve data from financial accounts — think of it as the Ford F-150 or Honda Accord of finance solutions. The Front API helps lending services, crypto companies, social trading communities, banking solutions, tax companies, and advisors collect and make sense of financial information from clients.
Offering emerging fintechs and finserv businesses these kinds of reliable solutions is our core mission. As we serve that information to firms building more informed and intelligent financial products, we have gained a lot of data on financial accounts connected through Front API which we can generalize, curate, and share insights about. We call it FrontIQ.
In this first-of-many series, we’re looking specifically at conclusions that can be had about large U.S-based broker-dealers — that’s your clients’ home base for trading equities, ETFs, and options. Let’s dive in to the research itself, starting with the value of assets connected:
- 1. The figure below is sorted by Connected Assets Under Management (Connected AUM.) TD Ameritrade is the most valuable brokerage in our sample by more than 2x over, as measured by CAUM.
- 2. The largest brokerage in our sample was Robinhood, which accounts for nearly 50% of all accounts connected to Front — for some perspective, that’s over 0.3% of Robinhood’s entire userbase. We took a subsection of about 5,500 users who had an active balance.
- 3. The highest Average Balance per User was Chase, arguably one of the most memorable names in traditional finance. Not far behind was Vanguard, a king of 401(K) plans, and TD Ameritrade.
- 4. Average AUM/User was lower than publicly-addressed figures reported by brokerages, which can be partially ascribed to falling equity valuations. Another important consideration is that many users connecting in Front API are fintech natives, users with two or more brokerage accounts who skew younger and generally have lower balances.