The devil in the 2,319-page Dodd-Frank Wall Street Reform and Consumer Protection Act can inevitably be found in the details of rule-making. But Tom Bradley, president of TD Ameritrade Institutional, believes that when everything shakes out at the end of the day, RIAs may not be as displeased as some expect.

"My worry is that we create a quagmire that entangles the business without improving investor protection and increasing costs that eventually get passed on to investors," Bradley says. "We don't need more regulation; we need better regulation."

With austerity now the chief priority on Capitol Hill, the risks are increasing that a budget-constrained Securities and Exchange Commission could consider turning RIA regulation over to FINRA. "There will be a significant uproar," Bradley believes.

All of which could hamstring the implementation of the labyrinthine Dodd-Frank legislation. "Advisors don't believe FINRA understands their business and they don't believe FINRA has been an effective regulator of the brokerage business," Bradley continues. "Advisors think FINRA has been too close to the brokerage business and they think the SEC has a better understanding of RIAs."

Despite these concerns, Bradley is cautiously optimistic that the benefits of Dodd-Frank will outweigh the costs and that if the playing field is tilted at all, it may be more favorable to RIAs than others. "It should do a more effective job of regulating the financial services business," he says. "Still, RIAs will probably come out on top with regulations that differentiate the value of their business model."

Why? "It will be very difficult for the SEC to do anything but apply a broad fiduciary standard to anyone providing personalized financial advice," Bradley says.

However, one of the securities industry's chief functions in the economy is to aid in capital formation. By most definitions, marketing and selling initial public offerings is hardly a fiduciary activity, yet it serves a critical purpose in generating growth and jobs. "Wall Street will be able to continue to sell new issues, but the folks who distribute them will be held to higher disclosure standards," he says. "It [Dodd-Frank] will change the landscape of the entire financial services business."

In the almost 11 years since Bradley has run TD Ameritrade Institutional, its assets have swelled from $9 billion to about $135 billion. Over the last decade, he has seen sweeping changes ripple through the RIA world.

Although TD Ameritrade Institutional has some huge RIA clients, such as Ken Fisher's Fisher Investments and Ric Edelman's Edelman Financial, the custodian also has thrived serving smaller RIAs. Bradley thinks the increased cost of regulations and compliance may ultimately drive further consolidation in the business.

About 50% of the breakaway brokers who affiliated with TD in 2010 joined an existing advisory firm, and he expects that trend to continue. "Big RIA firms often have additional capacity and they can plug new advisors into their back offices and increase revenues" at little additional cost, he says.

Since the Great Recession ended in the spring of 2009, the business environment for independent financial advisors has rebounded faster than it has for many other businesses. In May 2009, the month that the recession ended, TD Ameritrade Institutional surveyed 500 advisors and found that 49% said they were adding clients. Asked the same question again in November 2010, fully 70% were growing their client bases. Not surprisingly, 64% said that full-commission firms were their primary source of new business, up 7% in the past 12 months.

After RIAs survived a brutal two years, career satisfaction among them stands at 77%, the highest level in the survey's history, and up 10% since early in 2010. Moreover, advisors' upbeat attitude about their own jobs would appear to be influencing their outlook about the economy, with 46% optimistic about the direction of the economy over the next three months. That's up 30% from the previous quarter.

Consequently, 33% of the 500 RIAs surveyed report that they are investing in their own firms. One year ago in late 2009, when memories of the financial crisis were recent, the figure was much lower.

Marketing and technology were top priorities, but spending appears to be headed up across the board. Between 2009 and 2010, 21% of the RIAs polled said they were increasing travel budgets, 8% were expanding salaries and bonuses by 8%, 41% were shelling out more on employee benefits and professional development and 59% were spending more on staffing.

Growth remains the top goal for 71% of the RIAs. This was followed by 36% who cited client satisfaction as a key goal.

Not surprisingly, pending regulatory reform remains the greatest concern of 60% of the RIAs interviewed, with 59% saying they would dedicate more time and money to compliance. More than 40% wish to continue to be regulated by the SEC, while 28% prefer to be regulated by the states. Only a tiny minority want to be regulated by FINRA or by the CFP Board of Standards.