New Product Incubation Opportunities in the U.S. Move from Wirehouses to RIAs

New Product Incubation Opportunities in the U.S. Move from Wirehouses to RIAs


June 2018, Boston. Newly released research from Cerulli Associates, a global research and consulting firm, finds that as wirehouses narrow their shelf space and resist launching new offerings, managed account sponsors should be turning to large RIAs. These firms represent a set of sophisticated buyers who can help incubate new products and develop a track record.

“Once the go-to distribution outlet for new products, wirehouses are reducing the offerings on their shelves and severely limiting launches of new offerings, including managed accounts,” explains Tom O’Shea, a director at Cerulli. “In contrast, RIAs, which are growing faster in terms of both assets and advisors, provide a better outlet for nurturing new financial products.”

“The number of advisors in the RIA and hybrid RIA channels increased by 5.0% and 7.9%, respectively, between 2012 and 2016, while wirehouse advisor growth declined slightly by 1.5%,” says O’Shea. “During this time, assets in the wirehouse channel grew more slowly, at 5.4%, compared with the hybrid RIA channel expanding by 10.7% and the independent RIA channel growing by 11.7% during the same period.”

“As the RIA industry becomes concentrated in the hands of billion-dollar firms and consolidators, the channel is beginning to develop a more sophisticated approach to building portfolios and selecting products,” continues O’Shea. “For managed account sponsors that are willing to deploy sophisticated salespeople capable of interacting with the technical gatekeepers of large RIAs, this channel provides an excellent place for envisioning, developing, and launching new managed account products.”

The second quarter 2018 issue of The Cerulli Edge - Managed Accounts Edition explores the importance of managed account sponsors developing a deep understanding of the channels to which they market to ensure success

Looking for more information? Contact Us.