Independent RIAs to Surpass Wirehouses: Cerulli

Terry Flanagan

The combined asset market share of the independent advisory channels will surpass the wirehouse market share in the next 5 years, according to Cerulli Associates, a global analytics firm.

“Multiple factors have contributed to the historical and expected growth of independent channels,” Kenton Shirk, associate director at Cerulli, said in a release. “More than two-thirds of advisors indicate they would prefer the independent broker/dealer, registered investment advisor, or dually registered models if they decided to leave their current firms.”

A key factor is the flexibility and autonomy inherent in the independent channel with regard to portfolio construction, operational flexibility, fee structure, and technology. “The economics can also be appealing to advisors, as payouts are higher and advisors become responsible for their own overhead decisions,” said Shirk. “Independent advisors can build long-term enterprise value in not only their own solo practice, but also in a broader business entity comprised of multiple advisors, staff, and infrastructure.”

Cerulli’s Advisor Metrics 2014: Capitalizing on Transitions and Consolidation report focuses on advisor trends and consumer information, including market sizing, advisor product use and preferences, and advice delivery.

“Many independent broker/dealers and custodians have sufficient scale to offer broad and deep service offerings. Now many of the services offered have become commonplace across platforms, such as practice management resources, financial planning support, and investment research,” Shirk said. “Technology advances have also minimized the differences in platform capabilities across channels.”

Projected market share gains in the RIA and dually registered channels will likely come at the expense of wirehouses and independent broker/dealers, as Cerulli expects both channels to lose significant asset market share over the next five years.

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