Dually registered advisors have more options for generating revenues. They may combine commissions, 12-b1 fees from mutual funds, and fee-based compensation, for example.
Some may start their own independent RIA while keeping their registration with a broker-dealer for back-office services.
The dual registration seems to be most popular with advisors who move from independent broker-dealers who may be accustomed to functioning independently while increasing their
reliance on fee-based business.
Those advisors are choosing to manage their fee-based relationships under their own RIA instead of using their independent broker-dealer’s corporate IRA.
Wirehouse brokers and other broker-dealer advisors find it easier to transition their fee-based and commission-based business if they become dually registered.
Cerulli Associates predicts wirehouses will lose 6.9% of asset market share from 2011 – 2014.
Regional firms look to be the biggest winners over that time period with predicted growth of 3.5% in asset market share.
Dually registered and RIA channels are predicted to grow by 2.4% and 2.2% respectively.
Regional broker-dealers may be able to add advisors who serve the mass affluent—advisors that wirehouses are abandoning in their pursuit of investors with larger assets.
The wirehouse model in its current form, however, inherently is the least attractive for meeting the needs of the wealthy. The independent RIA model has the built-in flexibility and client focus that is closer to the authentic family office model.
It could also be argued that the hybrid market supports the fiduciary standard becuase it facilitates charging commissions for those investors who trade less often. In certain cases, commissions may indeed be a lower fee structure for such clients.
Either way, RIAs have distinct advantages developing at a rapid pace in the marketplace. The next few years will be some of the most exciting from an industry development viewpoint.

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