Even while confronting their fair share of market headwinds in 2022, registered investment advisors experienced a burst of growth as new players entered the scene and existing participants continued to welcome new recruits, according to Cerulli.
In its latest research on the RIA market, Cerulli Associates revealed that total assets in the RIA channel dipped by 13% over the course of 2022 as the carnage in the broader financial markets filtered through to investor portfolios.
Nevertheless, the pace of growth in the number of advisors accelerated substantially, to clock in at 8.6 percent, nearly doubling the annualized rate of 4.4 percent over the previous 10 years. That momentum, according to the report, came as new RIAs broke into the industry and breakaway advisor teams continued to join the large incumbents.
According to Cerulli, the number of retail-focused RIAs expanded by more than 11 percent in 2022, which included a large amount of new independent RIAs (12.3 percent).
The firm’s 2023 RIA research also revealed a pattern of continued fragmentation and imbalance in the sector.
An overwhelming 93-percent majority of all RIAs reportedly had less than $1 billion in AUM, Cerulli said, while those that have broken past the billion-dollar AUM mark managed 71 percent of all RIA assets and employed nearly half of all advisors (47 percent).
“2022 continued to highlight the obstacles that many smaller firms face due to not having the resources or capacity to differentiate and foster inorganic growth in a challenging market,” said Stephen Caruso, senior analyst at Cerulli.
The growth in assets and market share is expected to continue accruing mostly among billion dollar-plus RIAs, Caruso said, as breakaway teams leave employee-based models for large incumbent RIAs that promise more autonomy.
Cerulli’s research suggests future growth in the market will continue to be supported by backing from private equity firms.
Industry consolidators, it predicted, will continue to seize on opportunities to acquire growth-challenged firms whose processes, talent base, and client profile align with theirs.
However, Cerulli expects to see a moderation in annual growth within the RIA space as the pent-up pipeline from the Covid-19 pandemic normalizes.
The new regional leader brings nearly 25 years of experience as the firm seeks to tap a complex and evolving market.
The latest updates to its recordkeeping platform, including a solution originally developed for one large 20,000-advisor client, take aim at the small to medium-sized business space.
David Lau, founder and CEO of DPL Financial Partners, explains how the RIA boom and product innovation has fueled a slow-burn growth story in annuities.
Crypto investor argues the federal agency's probe, upheld by a federal appeals court, would "strip millions of Americans of meaningful privacy protections."
Meanwhile in Chicago, the wirehouse also lost another $454 million team as a group of defectors moved to Wells Fargo.
Orion's Tom Wilson on delivering coordinated, high-touch service in a world where returns alone no longer set you apart.
Barely a decade old, registered index-linked annuities have quickly surged in popularity, thanks to their unique blend of protection and growth potential—an appealing option for investors looking to chart a steadier course through today's choppy market waters, says Myles Lambert, Brighthouse Financial.