While established industry giants in the wirehouse channel make up four of the top-five broker/dealer (B/D) firms when ranked by assets under management (AUM), financial advisors continue their move toward independence, seeking greater flexibility to run their practices as they see fit, according to the latest Cerulli Edge—U.S. Advisor Edition.
Independent and hybrid registered investment advisors (RIAs) experienced the largest year-over-year advisor headcount growth rate, a trend that holds true over five- and 10-year periods. The promise of independence is alluring to advisors and continues to draw movement from the B/D to the RIA channels.
According to Cerulli, the number of independent RIA firms has grown at a compound annual growth rate (CAGR) of 2.4% over the last decade, while the number of advisors operating at independent RIAs has grown at a CAGR of 5.2% over the same period.
While Cerulli projects industry financial advisor headcount will remain relatively flat over the next five years, among all channels, independent and hybrid RIAs are projected to gain the most in advisor headcount marketshare. By 2027, Cerulli projects the channels will control nearly one-third (31.2%) of intermediary asset marketshare, continuing the trend of advisors and assets moving to these channels.
“Although the wirehouse channel dominates industry assets and average advisor productivity, the flexibility and higher payout percentages of independence is appealing to many advisors,” says Andrew Blake, associate director. “B/Ds will need to continue to leverage the benefits of working under corporate scale, which include access to technology, training, and client resources, to highlight the alluring aspects of affiliation with a major B/D. Otherwise, they risk seeing channel migration trends continue.”