The overall advisor population has been sliding -- and a new study finds that only one category of advisors is expanding to fill the gap.

Between 2004 and 2012, the number of RIAs grew steadily at an annualized rate of 8%, while other advisory channels have contracted by more than 1% a year, according to a study by research firm Cerulli Associates.

"RIAs are the sole growth story in a shrinking industry,” Cerulli director Bing Waldert said in a statement. He called the channel “one of the industry’s most buzz-worthy trends.”

Earlier this year, a separate Cerulli study found that the number of advisors has dropped by 32,000 since 2005 -- a decline that researchers attributed mainly to older advisors who are retiring and a paucity of young advisors emerging to replace them.


The shift is “testament to a changing landscape,” says Mark Tibergien, president of Pershing Advisor Solutions, which custodies assets for advisors across multiple channels.

The overall shrinking of the retail financial services business “is due to demographics, economics and a desire for some to change their business model,” says Tibergien, whose company has been tracking the trend.

Currently, the insurance channel counts the most advisors, according to the earlier Cerulli study.


Among the factors fueling RIA growth has been the "breakaways" of advisors with established practices from employee or independent broker-dealers, who go on to launch their own advisory firms, according to Cerulli.

Yet many broker-dealers are responding to the shift by coming up with incentives to better support the RIA model, Tibergien notes.

And breakaways are “not the sole source of growth for the RIA channel," according to Waldert. "Nontraditional competitors, such as law and accounting firms, have entered the advisory industry."

Meanwhile, wealthy clients must choose from an dwindling number of advisors overall.

“That is why this is such a compelling career choice for young people,” Tibergien says. “An oversupply of clients and an undersupply of people to give advice.”

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