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Why the RIA Route Is Increasingly Popular — Schwab

November 14, 2017

The call of the wild seems to be increasingly tempting in the wealth management space. The number of new RIA registrations at the SEC level has gone up 75% since 2012, according to a new Schwab report cited by ThinkAdvisor.

In 2016, 199 new firms registered with the SEC, compared to 114 in 2012, 150 in 2013, 131 in 2014 and 189 in 2015, according to an analysis by Schwab Advisor Services cited by the publication. Schwab analyzed RIA filings with the SEC, including in their count firms actively engaged in ongoing supervision or management of securities portfolios and having assets under management for high net worth investors. Their analysis excluded broker-dealers or broker-dealer representatives, ThinkAdvisor writes.

Meanwhile, the size of the firms going indie is also growing, according to the publication. In all, the 199 new registrants in 2016 manage close to $55 billion in assets, according to Schwab’s analysis cited by ThinkAdvisor. The number of new RIAs with at least $300 million nearly doubled compared to 2013, and they now account for $35 billion in assets — a 15% rise over the year prior, the publication writes.

Advisors are opting for independence because they want more choice and flexibility, Jonathan Beatty, senior vice president and head of sales and relationship management at the firm, tells ThinkAdvisor. Most of these firms are coming from wirehouses or independent broker-dealers, according to the publication.

Beatty tells ThinkAdvisor that the “burgeoning ecosystem” of supporting companies and available resources creates a momentum for going indie. Sixty-eight of the new RIAs in 2016 were multi-custodian registration, a 36% increase from the previous year, according to the data cited by the publication. Schwab says it was the custodian of choice for 40% of the firms going with a single custodian and for 66% of the firms opting for multiple custodians, according to ThinkAdvisor.

By Alex Padalka
  • To read the ThinkAdvisor article cited in this story, click here.