New research from global analytics firm Cerulli Associates predicts registered investment advisor (RIA) and dually registered advisor assets will reach 28% marketshare by year-end 2018.
"As of year-end 2013, the RIA and dually registered segment account for 20% of total intermediated retail investor assets, and we expect that number to reach 28% by 2018," says Kenton Shirk, associate director at Cerulli.
"The asset marketshare of the RIA channel exceeds headcount marketshare, reinforcing the fact that RIA advisors manage more assets than advisors outside of the channel, on average," Shirk explains. "When you combine this data with our projected growth of the channel, it would seem that the RIA channel would be a high priority for asset managers. However, the channel presents unique challenges for product providers, which can reduce the appeal."
Cerulli's latest report, RIA Marketplace 2014: Growth Drivers in an Accelerating Industry Segment, examines the unique dynamics of the RIA channel. This report provides insight about RIAs for providers and asset managers serving these advisors.
"Ongoing growth of RIA practices with more than USD1 billion in assets has occurred, and while these practices are certainly attractive on a standalone basis, they become less so when compared to wirehouse branch offices, which represent equal or larger opportunities," Shirk continues. "The reality is that strategic partnerships with large broker/dealers ensure branch office access and consideration for inclusion in the portfolios recommended by home-office teams, which can result in millions of dollars of flows based on a single decision."
Cerulli cautions that while the RIA and dually registered segments represent a flourishing distribution opportunity, product providers must make every effort to ensure they are creating an efficient and sustainable process to address this dispersed market.