In the independent world, the hybrid model is ascendant. Indeed, some of the biggest independent broker/dealer (IBD) advisors out there are embracing a mix that includes the RIA model alongside b/d commission business. Even Ron Carson, long the No. 1 on Registered Rep.'s Top 100 IBD advisor list, recently started an RIA and vowed to launch his own b/d. As we reported in May, Carson plans to transfer a chunk of his assets to the RIA model, though 85 percent of his $3 billion in AUM remains custodied with LPL Financial.

Carson is not alone. Advisor ranks in both the RIA and dually registered channels are growing much more steadily than those in the pure IBD channel, according to Cerulli Associates data. The RIA and dually registered channels are expected to gain 4.2 percent and 3.5 percent of headcount market share, respectively, between 2009 and 2014, Cerulli says. In comparison, the IBD segment's market share of rep headcount has remained flat since 2009 at 29.6 percent, according to Cerulli, and by 2014, the channel is expected to lose 0.1 percent of its share of the advisor market.

“While the IBD channel is capturing some breakaway brokers, it is also losing some to the RIA channel,” says Chip Roame, managing principal of California-based industry research and consulting firm Tiburon Strategic Advisors. He says the RIA channel will continue to be the big winner.

Not surprisingly, the RIA model is attractive to some IBD advisors. From Jan. 5 to Jan. 21, Schwab Advisor Services conducted a survey of 157 financial consultants and advisors of IBDs and insurance firms.
When asked about the appeal of becoming an independent RIA, 28 percent of respondents said they found the RIA model “very appealing,” while another 58 percent said they found it “somewhat appealing.” Another 12 percent said the model was “not at all appealing.”

Of course, the IBD model isn't going away. Assets are king in this business, and IBD assets are growing. By 2012, the IBD channel should gain 1.1 percent in asset market share versus 2010, according to Cerulli estimates.

Philip Palaveev, president of Fusion Advisor Network, says there's not much difference between the RIA model and the IBD advisor model in the end. Both are serving the same client; both are business owners; and both are using the same tools and methodologies for managing clients, he says. The only differences are that they are regulated by different bodies, and IBD advisors outsource, while RIAs tend to do things in-house, he says.

So who are the biggest players in the IBD world? Take a look at our list of the top 100 independent b/d advisors in the following pages, compiled by Meridian-IQ. The Meridian ranking methodology involves using a variety of data sources, including the Meridian directory of registered representatives, public data and data provided by the advisors and their firms. Meridian employs a proprietary process to ensure the most accurate rankings possible.

STACKING UP

While the wirehouses still hold the largest chunk of assets, the independent channel has a long lead in terms of headcount — and continues to grow.

Channel (2009) AUM ($Trillions) (2011) Share of AUM (2011) Advisor Headcount (Q2 2011) Advisor Headcount (2010) Advisor Headcount
Independent B/D $1.84 13.64% 133,223 131,891 127,934
Wire 6.88 50.97% 87,485 84,860 85,709
Bank 1.33 9.82% 79,685 80,482 82,092
Insurance 0.24 1.81% 52,670 54,250 54,793
Regional 1.09 8.10% 28,791 28,215 29,626

Source: www.meridian-IQ.com. Note: Penton Media, publisher of Registered Rep., is an investor in Meridian-IQ.