The independent and hybrid registered investment advisor (RIA) channels are growing at a faster rate than other intermediary channels. To capitalize on this opportunity, asset managers are expanding their coverage model and depth of resources to the largest RIAs, according to the latest Cerulli Edge—U.S. Advisor Edition.

The overall headcount of independent and hybrid RIA channels has soared in the last decade, from 18% to more than 27%, and is expected to surpass the 30% mark in the next five years. Advisors with a variety of experience and asset levels have made the shift, but the largest RIAs, those with more than $1 billion in assets under management (AUM), have seen the largest expansion. With this development, asset managers are enhancing their coverage model, expanding their menu of services to better suit these massive RIAs.

Currently, more than two-thirds of asset managers offer or plan to offer dedicated key account coverage, institutional pricing, and client-facing marketing materials to the largest RIAs. At least 75% of asset managers use or plan to use dedicated key account coverage to aid distribution efforts with the largest RIA firms. However, these types of resources no longer are sufficient compared to the more complex resources advisors now have come to expect in the industry.

“It is no longer a competitive advantage to provide only key account coverage or make more client-friendly marketing material available,” says Kevin Lyons, senior analyst. “Advisors are in search of more intricate resources that truly can benefit their practice by making it more efficient.”

As a result, distribution executives at asset managers also have begun to focus on other services—nearly 70% currently offer or plan to offer portfolio construction services/model construction services or investment analysis tools. Over half (52%) offer or plan to offer business consulting resources (e.g., succession planning, growth strategies, team structuring).

“Waves of advisors are joining the independent channel, coming from firms and channels that often provided portfolio analytics tools, consulting expertise, and investment analysis as part of the advisor’s affiliation. Asset managers understand the need to prioritize coverage in the RIA space and help fill in any gaps in research-related or even administrative services offered by their previous firms,” says Lyons.

“As more seasoned advisors migrate to the independent and hybrid RIA channels, asset managers can capitalize on the opportunity by increasing the depth of their competitive positioning with the quality of the resources they provide and become more appealing potential partners to advisors,” he concludes.