There is a perception that the registered investment advisor (RIA) market is growing fast in its number of advisors. If so, where are they coming from? Is there a substantial number of break-away brokers from the wirehouses, insurance agents from the captive insurance firms, or bank trust officers from the banks? Or is the flow really made up of existing independent reps registering their own RIAs and/or CPA firms adding such capabilities? This session was designed to allow participants to discuss their understandings of where RIAs are coming from and with what firms (custodians, broker/dealers, or otherwise) they are then working. Some of the other key take-aways of the session included:

	Tiburon CEO Summit XIV Ask the Distributors panelist Mark Tibergien (CEO, Pershing Advisor Solutions, Pershing, The Bank of New York Mellon Corporation)

The group debated why the number of RIAs is so low relative to the hype and the opportunity. Everyone agreed that RIAs are enjoying a higher level of client satisfaction and they are growing at a faster rate than their competition at the wirehouses. The consensus though was that the wirehouses, regional broker/dealers, and independent broker/dealers have increasingly adopted the RIA model, stemming the flow of personnel. For example, all of the major broker/dealers now offer fee-based advisory services, open architecture products, separately managed accounts, and exchange traded fund wrap accounts, all of which begin to blur the line between RIA and traditional wirehouse broker offerings

How many RIAs are going fee-only and dropping their FINRA licenses? Chip Roame (Managing Principal, Tiburon Strategic Advisors) said that, "there is really no substantial growth in the number of RIAs at the major custodians—Schwab, Fidelity, TD Ameritrade, Pershing—in the last few years"
Wirehouses are seeing some departures, mainly in the form of teams going to fee-only. This is partly because reps at wirehouses are forming teams of producers. The teams that do go the fee route tend to be the larger, more successful ones. Some go the IBD route, some go RIA fee-only
Migration has also not been great in terms of number of RIA firms, i.e. registrations, but there are a lot of brokers moving into existing fee-compensated firms. Thus the number of firms isn’t going up but the existing firms are getting larger in terms of clients, assets, and partners/staff. Tiburon research shows there are about 40,000 RIA partners out there today
The other observation made by the group was the difficulty faced by successful brokers considering going independent (as well as the substantial upfront fees they can collect by moving from one firm to another). Many brokers are ill equipped to manage businesses and see the prospect of doing so to be daunting. In addition, the decision seems to be a wash in terms of ultimate compensation as the successful brokers are garnering better deals than mid and low performing brokers. The group acknowledged that the decision for successful brokers to leave a wirehouse and go independent is more an emotional decision verses and economic one. Earlier in the day one panelist on the Tiburon CEO Summit XIV Ask the Advisor panel commented on going independent saying that, "it's scary to go independent because you do not have a compliance department behind you and you become a target out there"

The number of captive advisors has remained pretty stable for years at around 90,000 as Tiburon research shows that about 80% of wirehouse defections are to another wirehouse, not to IBDs or fee-only custodians
But in the end, consumers really don’t know the difference between brokers and advisors, between the sales model and the fiduciary model or care how an advisor is compensated—just that they trust him/her and feel taken care of

Chip Roame (Managing Principal, Tiburon Strategic Advisors) closed the session by saying that, "the fee-based financial advisor market is fascinating, but quite confusing and filled with inaccurate data. For instance, if Schwab has streamlined the bottom 20% of its clients for each of the past ten years, then that’s 10,000 RIAs out there or is the data inaccurate?