The firm’s December 2013 issue of The Cerulli Edge-US Asset Management Edition examines the RIA channel's evolution, how third-party vendor platforms reach advisors who value flexibility, and the emergent phenomenon of ETF strategists.

"The RIA channel has been one of the most buzz-worthy trends in the financial advisory and asset management industry in recent years," states Bing Waldert, director at Cerulli. "RIAs are the sole growth story in a shrinking industry,” Waldert said.

According to Cerulli, multiple factors have fueled the growth of this channel, most prominently the so-called "breakaway broker" - an advisor or team with an established practice choosing to leave an employee broker/dealer and creating their own advisory firm. Transitioning advisors have not only come from employee broker/dealers but also from independent B/Ds, it said.

"While the 'Breakaway Broker' has been an important driver of change, it is not the sole source of growth for the RIA channel," Waldert said. "Non-traditional competitors, such as law and accounting firms, have entered the advisory industry," he said.

"The unique challenges of business ownership are no longer an obstacle for a breakaway advisor," Waldert said.

While most RIAs are “very optimistic” about their business growth prospects over the next five years, a similar amount anticipate greater market competition for new assets, according to a recent Independent Advisor Outlook Study from Charles Schwab, issued at the firm’s recent IMPACT conference in Washington,  DC.

Of the 800 RIAs surveyed - representing $228.5 billion in assets under management - 44 per cent believe that regulatory changes will “make other advisory models look more like independent RIAs.” The need to differentiate from the competition is therefore “greater than ever,” according to 60 per cent.