Conversations about change in the registered investment advisory space are constant these days, thanks to volatile markets, new products and demographic shifts. What sort of future will these changes create for the industry? How will they alter advisors' daily lives? Tiburon Strategic Advisors' latest study, An Initial Overview of the Fee-Based Financial Advisors Market, published in August, offers a peek at what awaits RIAs.

"If there is any one trend in fee-based financial advisory product usage, it is the rapid movement to exchange-traded funds," says Chip Roame, managing principal of Tiburon. Roame expects RIAs to accelerate their shift into ETFs and alternative investments from mutual funds and individual securities. As a share of assets under management, mutual funds and securities will drop from 86% in 2007 to 66% in 2012, he predicts. ETFs will increase from 3% of AUM to 13% of AUM in 2012.

Wealth management services will also be more popular, thanks to the ongoing planning needs of aging baby boomers. That demographic will need more advice about estate planning, insurance, trust accounts and charitable giving on the high end, and reverse mortgages on the low. "Baby boomers still have lots of money and they are aging," Roame says. "Opportunities will be big here."

One element of RIAs' daily lives will remain constant: their favorite custodians. According to Roame, Charles Schwab, Fidelity Investments, TD Ameritrade, Trust Company of America and Pershing will continue to dominate the asset custody market.

Firms try to enter the custody business every year, lured in by growth in the fee-based financial advisory channel, but so far they have failed to gain much market share. Merrill Lynch and Shareholder Services Group are a couple of recent examples. Advisors might use new custodians for new client business, but the new company will grow market share very slowly unless they can penetrate the custodian's existing book of business.