New research by Cerulli Associates shows that billion-dollar RIAs have steadily accumulated asset market share since 2012, reaching 60% at the end of last year, a total of $2.4 trillion. And BDs should beware, the researchers warned, because many breakaway brokers find RIAs a more attractive destination.
Today, 687 RIAs have amassed $1 billion in assets by bringing on board big teams from other channels and engaging in robust merger and acquisition activity.
Still, these big RIAs comprise only 3.8% of all retail-focused firms, according to Cerulli. A healthy majority of RIAs manages less than $100 million in assets, and these outperform their largest counterparts in growth benchmarking exercises.
"RIAs of all sizes are choosing to merge for a number of reasons: depth of specialization, succession and growth through economies of scale," Cerulli research analyst Marina Shtyrkov said in a statement.
Cerulli's research indicates that RIAs that have already amassed billions of dollars in assets are increasingly merging to expand their talent, strengthen their intellectual capital and create super-regional firms.
"Some of the largest RIAs resemble small broker-dealers in size, service and brand awareness among advisors," Kenton Shirk, director of Cerulli's intermediary practice, said in the statement.
"Their ability to lure breakaway advisors should be a concern for BDs. Half of breakaway advisors prefer to join an established independent practice. Billion-dollar RIAs are becoming formidable competitors for BDs."
