March 2014, BOSTON. Global analytics firm Cerulli Associates predicts independent and dually registered investment advisors (RIAs) will reach a 26% marketshare by year-end 2016.
"We anticipate the growth of the RIA channel will continue, resulting in further gain in marketshare of retail advisory assets," comments Kenton Shirk, associate director at Cerulli. "We also expect the RIA channel to keep gaining advisors and advisory teams."
Cerulli's RIA Marketplace 2013: The Changing Landscape of a Maturing Industry report focuses on understanding the unique dynamics of the RIA channel. This report provides insights about RIAs for providers and asset managers serving these advisors.
The most publicized growth source for the RIA channel has been the so-called "breakaway broker," an advisor or advisory team leaving an employee broker/dealer to operate their own practice.
"The asset growth and share gain of the RIA channel has been so strong that it cannot solely be attributed to advisors choosing the independent business model," Shirk explains. "Clients have also increasingly been choosing to hold their assets with an independent advisor."
According to Cerulli, this trend is predominantly due to the role of large banks in the financial crisis and the resultant client distrust. It also signifies the maturation of the RIA channel and the recognition of the legitimacy of the business model by individual investors.