More advisors are making the move to RIA, independent models

investmentnews.com:

As more financial advisors go independent, David Settanni will attest that making the switch to the RIA space was one of the best things he did for his career.

“Being in the independent broker-dealer channel, I just felt that we didn’t have any necessarily brand recognition,” said Settanni, who’s advisor and chief financial officer at Settanni Financial, an independent RIA. “It was as if I was working in a wirehouse. So I said, ‘Well, we’re already independent, why not become truly independent?’”

He added that going independent allowed him to have an entrepreneurial mindset, which helped him conceive programs at lower costs for clients.

It’s a familiar move for many other advisors as well. Cerulli announced Monday that independent and hybrid RIA channels experienced the largest year-over-year growth rate in advisor head count, a trend that holds true over the five- and 10-year periods.

Cerulli found that the number of independent RIA firms has grown at a compound annual growth rate of 2.4% over the last decade, while the number of advisors operating at independent RIAs has grown at a CAGR of 5.2% over the same period.

“Although the wirehouse channel dominates industry assets and average advisor productivity, the flexibility and higher payout percentages of independence are appealing to many advisors,” Andrew Blake, associate director of Cerulli, said in a release.

Settanni said most advisors are likely making the move to RIAs as they try to find a balanced response to the pressures they face from both clients and wirehouses.

“Clients are generally demanding lower fees. So we’re trying to deliver [great investment products] to our clients and trying to work with them to potentially lower our fees,” he said. “But in the