Advisers Bear Assets to Independence

A new analysis from financial research and analytics firm Cerulli Associates finds adviser migration may grow independent channels to 38% market share by 2016.

The finding comes from Cerulli’s “Intermediary Distribution 2013: Managing Sales Amid Industry Consolidation” report, which examines the distribution of financial products within the U.S. The report also takes a deep dive into adviser market sizing, investment product use and asset manager sales trends impacting the financial advice business.

“Across the adviser industry, there is a strong desire for independent operation and ownership,” explains Kenton Shirk, an associate director at Cerulli. “The draw of autonomy, combined with the trend toward fee-only relationships, has enhanced the appeal of the independent channels.”

Cerulli’s report points to a shrinking pool of talent that will make it challenging for firms of all sizes to attract and retain quality advisers. And while Cerulli finds transition and retention contracts have lengthened to compensate for the lack of fresh blood, researchers warn that an aging adviser population will likely mean advisers who are successfully recruited may be less likely to be on a growth trajectory.

Cerulli finds short-term financial pressures have caused the financial advice industry, like other sectors of the economy, to prioritize productivity improvements over recruitment and training efforts. As a result, broker/dealers have trimmed their investment in the long-term health and stability of their adviser forces, further accelerating the growth of independent channels.  

Adviser movement and client trends are projected to continue to favor the dually registered channel, which Cerulli predicts will add 3.3% asset market share by 2016. Autonomy, flexibility and ownership are factors that attract advisers into the registered investment adviser (RIA) channel, Cerulli says.

However, while many advisers desire a pure fee-only business, reality more often dictates a mix of fee and commission relationships, Cerulli notes.

More information on how to obtain a copy of  “Intermediary Distribution 2013: Managing Sales Amid Industry Consolidation” is available here.