Close Close

Portfolio > Asset Managers

RIAs Continue to Gobble Up Wirehouses' Market Share: Cerulli

Your article was successfully shared with the contacts you provided.

Global analytics firm Cerulli Associates projects that the independent registered investment advisor (RIA) and hybrid RIA channels combined will increase their asset market share from 23% in 2015 to 28% in 2020 – likely outpacing wirehouses.

In 2015, according to Cerulli, the independent RIA channel grew assets faster than any other advisor channel (6.2% growth versus an average of 0.9% for all channels). Meanwhile, the wirehouse asset base shrunk 1.9% in 2015, ranking as the poorest-performing advisor channel in terms of asset growth.

“While wirehouses still hold a substantial share of assets, RIAs are the growth story,” Kenton Shirk, associate director at Cerulli, said in a statement. “To build a relationship within an independent practice, wholesalers need to truly understand a firm’s investment philosophy and decisionmaking process.”

This data is from Cerulli’s latest report, U.S. Intermediary Distribution 2016: Evolving Roles in Distribution, which also analyzes trends related to advisor product use, portfolio construction and allocation changes across industry segments.

The research reports that asset managers have identified registered investment advisors (RIAs), broker-dealer (BD) mega-teams and home-office due diligence relationships as the groups with the largest pockets of opportunity to generate revenue and increase market share.

These channels are also leading the trend toward more sophisticated, investment- and data-focused interactions that have traditionally been reserved for firms operating within the institutional space.

“In our survey of national sales managers, 67% rank increasing the technical skills of existing wholesalers to address more sophisticated advisor teams as the top priority,” Emily Sweet, senior analyst at Cerulli, said in a statement. “We believe this expanding institutional influence in the retail market, especially in the areas growing most quickly, will continue for the foreseeable future.”

The survey also finds that almost all (95%) of the national sales managers agree or strongly agree that data analytics provide key inputs to making strategic decisions in areas such as budget planning and advisor segmentation.

Cerulli expects asset managers to continue increasing data analytics resources as long as internal and partner firm inputs become more reliable and there is increased adoption by sales teams.

Another product trend that the survey identifies regarding product use is an increase in exchange-traded fund use, which can serve as a challenge to national sales managers.

According to Cerulli, advisors expect to increase their allocations to ETFs by 24% over the next two years, and independent broker-dealer (IBD) reps expect the greatest increase in ETF allocations by year-end 2018 (33%) and the greatest decline in mutual funds (-12%).

For national sales managers, almost 90% see this increase in low-cost product alternatives as a major challenge to achieving their distribution goals.

Two-thirds (67%) of national sales managers also consider pressure from BDs to increase revenue sharing a major challenge.

— Check out Growth of ETFs Is Not the Growth of Passive Investing on ThinkAdvisor.


© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.