RIAs to Hold 25% of All Client Assets in 2014: Cerulli

RIA-channel growth is outpacing the broader industry, the recent Cerulli study found, and is drawing the interest of asset management distributors. This growth is being spurred by strong advisor recruitment, breakaway advisors leaving wirehouse and other traditional firms to create their own independent firms, and a growing client preference for RIAs.

Other key research findings are:

• The appeal of the RIA channel has drawn more than 1,500 advisors from across the industry, managing on average $48 million per advisor.
• The success of the dually registered channel has been a highlight of the past year, as the channel compiled the largest growth rate in both assets and advisors.
• In Cerulli surveys, only 17% of dually registered advisors indicated a willingness to drop their broker/dealer affiliation.
• For advisors moving into the RIA channel, breaking away from a larger firm may result in decreased wholesaler coverage. No longer included in a large office with multiple producers, the RIA firm must justify coverage upon its own assets.
• The RIA channel cannot forever rely on advisor transition to generate growth. It must prove its sustainability through the hiring of new advisors to the industry.
• At $1.5 million in client assets, the majority of RIAs charge less than 100 basis points (bps) on client assets, but a few are able to maintain pricing power despite increasing assets.
• Advisors whose fee consciousness extends into their own revenue should be additionally cautious regarding manager fees.

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