Bucking the trend, RIA channel enjoys strong growth

The report attributes the RIA channel's expansion to several factors, chief among them an increase in the number of so-called "break-away brokers" — an advisor or team of advisors who leave an employee broker-dealer to establish an independent practice. Also contributing to the RIA channel's growth, Cerulli states, were increases in the number of non-traditional competitors, including law and accounting firms; and of independent broker-dealers transitioning to the RIA space.

"Owing to these multiple sources of growth, the RIA channel expanded from a cottage industry to an essential element within the financial advisory and asset management space," the report states. "As part of this maturation, the independent RIA channel has begun the transition from a coalition of small businesses to one that is populated by multiadvisor firms, similar to other traditional distribution channels.

"Likewise, many of the largest IBDs are either rolling out options for advisors to affiliate as independent RIAs or modifying their pricing to match that of custodians," the report adds. "The latter option presents opportunities to retain their own advisors and to compete for breakaways."

Cerulli notes also a rise in the average number of advisors per dually registered firm (i.e., advisors registered with both a broker-dealer and RIA firm). In 2012, the average number was 5.4, as compared to 3.9 in 2011, 4.1 in 2010 and 3.3 in 2009.