Not necessarily part of the financial backwaters anymore, America's regional broker-dealers are in growth mode, according to research from Cerulli Associates.
After years of being a ripe target for acquisition by the now-flailing major financial firms, smaller broker-dealers are turning into an attractive opportunity for advisors and asset managers.
Cerulli's new U.S. Asset Management study says that while the raw numbers represented by small broker-dealers dropped off during its study period (down from a high of 38,249 advisors in 2009 to 34,359 in 2010), it represents not only a three-year compound annual growth rate of 1.3 percent, but also remained very strong while the majors bled talent and resources at a massive pace.
Totaled, regional broker-dealers upped their share of financial advisor assets under management from 13 percent in 2007 to almost 15 percent in 2010.
"Regional B/Ds are currently well regarded by both their employees and their clients," said Bing Waldert, director at Cerulli Associates. "Advisros appreciate the importance of wealth management at these firms and our data reveals that among all distribution channels, investors who name regionals as their primary providers have the highest level of satisfaction.
Asset managers have responded by focusing their efforts on the regional broker-dealers, and many regionals have put in place research teams to review and recommend the right asset managers to their advisors.