October 2015, BOSTON. The latest research from global analytics firm Cerulli Associates finds that advisors are more likely to join an existing registered investment advisor (RIA) firm, rather than start their own independent firm.
“Many advisors are daunted by the task of forging their own path and the accompanying headaches,” states Bing Waldert, director at Cerulli. “Advisors considering the RIA channel are increasingly looking to join existing firms that can provide them with not only the necessary operational infrastructure, but also a sense of community.”
Cerulli’s fourth quarter 2015 issue of The Cerulli Edge-Advisor Edition explores recruiting and retention, looking closely at the factors influencing advisors to switch firms, and the demand for support and flexibility in terms of how the advisors choose to conduct business.
“A variety of platforms and support organizations have emerged to provide advisors with different ways to run their practices,” Waldert explains. “The rise of the Subaggregator is happening for two reasons. The first, as has been noted, is providing an option for advisors interested in the independent business model, but without the skills or desire to operate their own business. The second and unique reason for the rise of these firms centers on the culture and community of being part of a smaller organization.”
“Cerulli is naming this class of firms the Subaggregators because their business model in many cases escapes traditional definitions of broker/dealers (B/Ds), RIAs, or office of supervisory jurisdiction (OSJs). They use the platform of a larger firm, such as a B/D or custodian, that more frequently works directly with advisors,” Waldert continues. “These firms support multiple advisory practices, with advisors operating autonomously, often across multiple geographies. They have professional leadership in place. Perhaps most importantly, the advisor’s primary relationship is with the Subaggregator rather than the B/D, custodian, or platform. Advisors are recognizing this evolution and believe the rise of Subaggregators is the next generation of financial firms.”