In fact, the number of financial advisers working as RIAs grew at an annualized rate of 8% between 2004 and 2012, while every other advisory channel examined by Cerulli declined more than 1% during the same period.  

“The RIA channel has been one of the most buzz-worthy trends in the financial advisory and asset management industry in recent years,” Bing Waldert, director at Cerulli, says. “RIAs are the sole growth story in a shrinking industry.”

Multiple factors are fueling growth in the RIA channel, Cerulli’s research shows. Most prominent is what researchers called the breakaway broker—or an adviser within an established practice choosing to leave an employing broker/dealer to create an independent advisory firm.  

Other factors driving growth in the RIA space include the introduction of nontraditional competitors, such as law and accounting firms, who have in recent years started competing seriously for financial advisory work.

Here’s a short list of how the number of financial advisers working in other business models changed during the same time period:

• Regional broker/dealers shrunk 1.2%;
• insurance broker/dealers down 1.4%;
• independent broker/dealers also shrunk 1.4%;
• bank broker/dealers off 1.9%;
• wirehouses down 2.5%; and
• all adviser models taken together down 1.2%.     

In-depth results from Cerulli’s latest research are available in the December 2013 issue of “The Cerulli Edge—U.S. Asset Management Edition.” Other topics covered include the historical evolution of the RIA channel, how third-party vendor platforms reach advisers who value flexibility and the emergent phenomenon of ETF strategists.

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