The advisory industry will shed more than 25,000 financial planners over the next four years, down to just more than 280,000, according to research firm Cerulli Associates.

It's bad news for the advisory industry overall, but there is some good news for RIAs.

The RIA and dually registered channels are the only areas expected to grow, according to Boston-based Cerulli, while the wirehouses and broker-dealer channels are expected to shrink the most. This divergence is expected to continue, Cerulli says, as advisor movement and client trends should continue to favor the dually registered channel while wirehouses and IBDs are expected to suffer more market share losses.

"The outlook for independent RIAs is bright," says Ron Rhoades, program chair of the financial planning program at Alfred State College and a fee-only financial advisor. "Consumers are looking for financial and investment advisors who truly put the best interests of the client first and foremost by avoiding the many conflicts of interest so prevalent in financial services today," he says, adding that an increasing number of advisors have contacted him this year for advice on how to become fiduciary advisors. "I expect this trend will continue," he concludes. 

To put it in perspective, however, the RIA and dually registered channels account for only 15% of the industry's advisors, according to Sean Daly, an analyst at Cerulli. The insurance channel accounts for the largest portion of the advisor population. Meanwhile, the independent broker/dealer channel experienced the largest market share change over the last few years.

Why the reduction in advisor population? After peaking in 2005, industry headcount has declined by more than 32,000 advisors, Cerulli's research finds. This reduction is largely due to retirement without sufficient replacements of new advisors, and to a lesser extent, trimming of advisors with insufficient production, according to Cerulli's study. “Headcount losses will accrue from the wirehouse, independent broker/dealer, bank, and regional channels," Daly says. 

Moreover, increases in productivity, made possible by improvements in technology, support services, and advisor training, have put distance between top advisors and the rest of the pack, Cerulli says.

Cerulli's findings are the latest in a series of recent studies pointing to the growth of the RIA population. In April, the firm found that RIA assets are expected to account for approximately a quarter of the financial advisor asset market share by the end of next year. “The advisor channel is still the fastest-growing segment of the financial services industry — that’s why people are flooding toward it,” Chip Roame, the managing principal of Tiburon Strategic Advisors, said in March at Tiburon's CEO Summit in New York City. 

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