The number of financial professionals working under the registered investment advisor model grew 8 percent per year from 2004 to 2012, while all other channels lost practitioners, according to a study by Cerulli Associates.
For the years examined, the total number of advisors fell 1.2 percent, the Boston-based research firm said.
The largest drop was at wirehouses, where the number of advisors dropped by 2.5 percent annually. The number of advisors at bank broker-dealers fell by 1.9 percent a year. Other broker-dealers – regional, insurance and independents – saw their ranks thin by 1.2 percent to 1.4 percent each year.
The main driver of the rise of RIAs, the firm said, was the breakaway broker phenomenon which has seen advisors or teams leave established employee or independent broker-dealers to form their own firms.
“While the ‘breakaway broker’ has been an important driver of change, it is not the sole source of growth for the RIA channel,” Bing Waldert, a Cerulli director, said in a statement. “Nontraditional competitors, such as law and accounting firms, have entered the advisory industry.”
Those factors spurred the growth of the RIA channel from a cottage industry to an essential part of the asset management industry, Cerulli said.
Cerulli found the main reasons advisors said they were attracted to the RIA model were: portfolio construction flexibility (14 percent), acquisition or succession (14 percent) and operational flexibility, including technology (13 percent).
In September, a Cerulli report projected that the total number of advisors would drop by 25,000 to 280,000 by 2017. Assets under management were expected to rise for all channels but independent broker-dealers.