Number of Advisors Going Indie Up 75% Since 2012: Schwab

Schwab analyzed SEC registration data to determine the number of advisors who entered the independent space

Jonathan Beatty of Schwab. Jonathan Beatty of Schwab.

The move to independence is stronger than ever – with more firms going independent in the past five years, according to a new data analysis from Schwab Advisor Services.

Schwab Advisor Services analyzed 2016 Securities Exchange Commission (SEC) registration data and found that the number of advisors who entered the independent space – as RIAs – showed strong momentum.

According to the data, new registrations at the SEC level grew by 75% since 2012, from 114 new RIA firms to 199 new firms in 2016. In 2013 there were 150 new registrations, followed by 131 new registrations in 2014 and 189 in 2015.

Firms established in 2016 represent nearly $55 billion in assets under management, according to the data.

According to Jonathan Beatty, senior vice president and head of sales and relationship management, Schwab Advisor Services has been tracking this data internally for about four or five years.

“[We] thought it was a good timing to start to share it externally,” he told ThinkAdvisor.

According to Beatty, advisors are choosing independence “for the purposes of choice and flexibility and how they serve their clients.”

“As they see the architecture around them becoming less flexible, they look out and they see the opportunity of independence,” he explained.

This year’s data shows that large firms are increasingly prominent in fueling the independence movement.

The percentage of firms turning independent with at least $300 million in AUM has doubled since 2013. In addition, the firms with more than $300 million in AUM managed a total of $35 billion in AUM in 2016, a 15% increase over the previous year.

The average deal size for firms registered with the Securities and Exchange Commission increased 2% to $276 million since 2015, and larger deals are driving more multi-custodian selections.

The data also finds that multi-custodian registrations increased 36% year over year as larger firms move to independence. There were 68 multi-custodian registrants in 2016, with an average size of $379 million, according to the data.

“With this burgeoning ecosystem that is out there to support advisors in the move to independence … there’s more and more resources and capabilities in the marketplace to support these teams as they’re looking to move to independence. As well as us the custodians,” Beatty said. “More and more resources with a proven path generates more momentum.”

These advisors that are moving into independence are largely coming from IBDs and wirehouses.

According to the data, Schwab has 40% market share of the newly registered SEC firms making a single custodian selection. Also, Schwab was named in 66% of multi-custodian deals in 2016.

The data in Schwab’s analysis is based on all 2016 RIA filings currently approved by the SEC. To be included in the analysis, firms must have been established in 2016 and must be actively engaged in ongoing supervisory or management of securities portfolios. The firms must also have AUM for high-net-worth clients and must not be a broker-dealer or a representative of a broker-dealer.

---Related on ThinkAdvisor:

Reprints Discuss this story
We welcome your thoughts. Please allow time for your contribution to be approved and posted. Thank you.

Related

7 Top Online Brokerages: Kiplinger

Kiplinger ranks firms based on commissions, investment choices, tools, research, ease of use, mobile access and advisory services.

Most Recent Videos

Video Library ››