Registered investment advisors and RIAs who are dually registered as broker-dealers are growing their assets under management faster than any other distribution channel, according to new research.
Cerulli Associates, Boston, published this finding in a study “The State of the U.S. Retail and Institutional Asset Management 2012.” The report analyzes the dynamics of the retail and institutional channels and examines the preferred investment vehicles in these markets.
The report discloses that the dually registered RIA/B-D channel boosted assets under management by a compounded annual growth rate (CAGR) of 19 percent in 2012, the fastest among the 9 distribution channels analyzed in the study. RIAs alone grew their assets by 14.7 percent last year; including those who are dually registered, the RIA channel’s assets rose by 13 percent.
The only other distribution channels to enjoy a positive growth rate in 2012 were bank broker-dealers, whose assets rose by a CAGR of 4.8 percent; and regional B-Ds, which enjoyed a two percent GAGR gain.
Other distribution channels suffered negative growth rates. Among them:
● Wirehouses (-.0.3 percent)
● Independent broker-dealers (-11.8 percent)
● IBDs, including dually registered (-5.8 percent) and
● Insurance broker-dealers (-1.3 percent)
“Advisors are migrating into the RIA channel, either by starting their own practice or joining existing firms,” says Cerulli Associate Director Tyler Cloherty in a press statement. “As advisors move into the RIA and dually registered channels, many new entrants will be progressively smaller, but this is contributing to significant growth within the channels.”
The dually registered channel, however, still comprises less than 10 percent of the market in terms of assets under management. Dually registered RIAs/B-Ds now hold 7.9 percent of AUM.
By comparison, the wirehouse channel, regional broker-dealers, independent B-Ds and RIA-only channels holds 41.1 percent, 15.8 percent, 14.1 percent and 12.2% of assets under management, respectively.