Investment advice — NAICS 523930 industry report

01

Size and shape

How many businesses there are and how small they are. Fragmentation is the first thing an entrant — or anyone selling software into this industry — needs to know, and it is one of the few things that is actually measured.

Canadian establishments by number of employeesA

1–42,43577%

5–943014%

10–191665%

20–49752%

50–99371%

100–19990%

200–49910%

500+0—

Of 3,153 Canadian establishments with employees, 91% have fewer than ten — an industry of very small operators.

Where they areA

Ontario1,55249%

British Columbia52016%

Quebec38112%

Alberta34011%

Largest four provinces by establishment count. Establishments with employees only — sole operators with no payroll are not in this table, so in trades and personal services the true number of businesses is higher.

How many new establishments are still tradingA

Finance and Insurance, US · opened 2020

85.2%

1 year

65.1%

3 years

53.8%

5 years

38.4%

10 years

opened 2015

Measured, not forecast: the share of US establishments opening in one year that were still active later. It counts good operators and bad ones together, which is exactly why it is the honest answer to “what are the odds”. It is for the whole sector rather than this market, and the ten-year figure comes from an older cohort because no younger one has reached ten years.

02

How businesses here compete

The structural profile of subsector 523, which every industry beneath it inherits. This is analyst judgment from how the subsector is organised — not research into this industry, and not a measurement.

national competitionmedium capitalUNVERIFIEDinherited from 523 Securities, commodity contracts, and other financial investment and related activities

Registration is the barrier and the book of clients is the asset. Advisory practices are acquired and rolled up rather than started cold.

Who sets the price: Fee compression from passive products.
The software it runs on: Portfolio management, trading, post-trade and client reporting.

03

Market screens and studies

Market-entry records filed along this branch of the hierarchy. A record at or beneath this code is about this industry; one above it is about something wider that contains it.

Screened one level up. Nothing is filed at this exact code; the screen for 5239 Other financial investment activities covers it.

Vertical softwareScreenedfiled at 5239

Financial Data & Credit AnalyticsOne thing must be true

binding constraint: defensibility

Incumbent S&P Global and Moody's

The moat here is legal as well as commercial: credit ratings used for regulatory capital purposes must come from a designated agency (NRSRO in the US, equivalent recognition elsewhere), and that designation is not obtainable by a startup. The adjacent data and analytics businesses are defended by decades of accumulated proprietary history that cannot be back-filled. This is the clearest example in this research of a market where the barrier is a licence somebody else already holds. Sourced update: S&P Global's Market Intelligence segment alone is a $4.92B business and Moody's Analytics is now 97% recurring — an entrant is not selling data into a gap but into two subscription estates that already own the workflow.

NAICS 52393 vendors named5 sourced figuresOpen →

04

Software serving this industry

The vertical software markets filed along the same branch — who sells to these businesses and who they would have to displace — and then the generic categories every business buys whatever it does.

Sold across the wider branch

Vertical softwareScreenedfiled at 5239 Other financial investment activities

Financial Data & Credit AnalyticsOne thing must be true

binding constraint: defensibility

Incumbent S&P Global and Moody's

The moat here is legal as well as commercial: credit ratings used for regulatory capital purposes must come from a designated agency (NRSRO in the US, equivalent recognition elsewhere), and that designation is not obtainable by a startup. The adjacent data and analytics businesses are defended by decades of accumulated proprietary history that cannot be back-filled. This is the clearest example in this research of a market where the barrier is a licence somebody else already holds. Sourced update: S&P Global's Market Intelligence segment alone is a $4.92B business and Moody's Analytics is now 97% recurring — an entrant is not selling data into a gap but into two subscription estates that already own the workflow.

NAICS 52393 vendors named5 sourced figuresOpen →

And what every business buys · 25 generic categories

Sold to every industry rather than this one, so they are filed against the software industry's own code. The same few vendors recur across most of them.

05

Who works here

The occupations employed in Finance and insurance, most concentrated in it first. The share is measured against the whole sector, not this industry — the published cross-tabulation stops there.

Concentrated in this sectorA

Insurance, real estate and financial sales occupations Mostly one sector 51.9%

Auditors, accountants and investment professionals Mostly one sector 43.1%

Computer, software and Web designers and developers Mostly one sector 7.6%

Managers in engineering, architecture, science and information systems Mostly one sector 6.4%

Judges, lawyers and Quebec notaries One industry 3.2%

Library, correspondence and other clerks Mostly one sector 3.1%

Service supervisors Mostly one sector 2.8%

Electrical, electronics and computer engineers Mostly one sector 2.8%

College and other vocational instructors One industry 2%

Cashiers and other sales support occupations One industry 1.8%

These jobs are mostly done here. An operator in this industry is competing for them against others in the same industry, not against the whole economy.

And the jobs every business has

Accounting, insurance and related business administrative occupations Across the economy 25.8%

Customer and information services representatives Across the economy 23.9%

Financial, insurance and related administrative support workers Across the economy 13.8%

Survey, statistical and data entry occupations Across the economy 9.1%

Administrative services managers Across the economy 8.9%

Administrative and financial supervisors Across the economy 8%

Technical occupations in computer and information systems Across the economy 7.2%

Legislative and senior managers Across the economy 6.6%

Office administrative assistants - general, legal and medical Across the economy 5.5%

Administrative, property and payroll officers Across the economy 4.5%

Found across at least fourteen of the twenty sectors. But note the shape of this industry: 91% of establishments have fewer than ten employees, and at that size most of these roles are one person wearing several hats, or bought in from outside.

All 162 occupations →