Independent advisors are expected to boost their share of assets under management to 38 percent of AUM by 2016, according to a new report.
Cerulli Associates discloses this finding in “Intermediary Distribution 2013: Managing Sales Amid Industry Consolidation.” The annual study, now in its 10th iteration, examines the current state of financial product distribution through intermediaries in the U.S. Analysis includes Cerulli’s annual advisor market sizing, and an examination of the distribution dynamics, advisor preferences and behaviors related to mutual funds, separate accounts, ETFs, alternatives, insurance and annuities.
Fueling the increase in market share is a migration of advisors to independent practices from other channels, the research shows.
“Across the advisor industry, there is a strong desire for independent operation and ownership,” says Cerulli Associates Associate Director Kenton Shirk. “The draw of autonomy, combined with the trend toward fee-only relationships, has enhanced the appeal of the independent channels.”
The independent channels surveyed in the report — wirehouses, regional broker-dealers, registered investment advisors, dually registered advisors, independent broker-dealers, bank broker-dealers and insurance broker-dealers — are expected to control $15.3 trillion in assets by 2016, up from $434.5 billion in 2012. That represents a compounded annual growth rate (CAGR) of 4.7 percent.
The fast-growing channel by far comprises dually registered advisors (i.e., those affiliated with registered investment advisors and broker-dealers). Over the same four-year period, this market segment is expected grow at a 13.7 percent CAGR, a rate surpassing that of the next two fastest-growing channels: bank broker-dealers and regional broker-dealers.