Mar 26, 2012 --- Competition
for asset managers is fierce in the registered investment adviser (RIA)
Fewer than 1,500 of the more than 16,500 firms in the
channel manage 90% of the assets, resulting in a short list of frequently
targeted firms, according to research from Cerulli Associates.
Assets have consolidated in the RIA segment, causing the
asset management distribution process, adviser portfolios and product demands
"More than 80% of RIA firms fall below the $100 million
asset threshold used by many asset management distributors to justify sales
focus,” said Scott Smith, head of Cerulli’s intermediary practice. “Asset
managers searching for untapped markets will be unimpressed with the lack of
assets at the lower tier of the RIA market.”
Cerulli’s research also found that although assets grew
16.6% from year-end 2009 to year-end 2010, the number of firms in the RIA space
actually fell 1.1%. Rather than a sign of slowing growth in the channel,
Cerulli analysts think this represents a beneficial maturation in the channel
as less successful firms left the industry, and incoming advisers increasingly
chose to join existing practices instead of starting their own.
Cerulli predicts there will be a continued increase in asset
growth as larger RIA practices target advisers in the wirehouse and regional
channels who want increased independence without the complications of starting
a small business.
This research is from "Cerulli Special Quantitative Update:
Registered Investment Advisor Market." For more information on the report, contact CAmarketing@cerulli.com.