Anyone seeking a glimpse of the advisory business at this moment in time would have a hard time finding a better report on the subject than the current issue of Financial Advisor. And what they would find is an industry in the midst of structural and generational change.

In the cover story, senior editor Eric Rasmussen takes a look at the state of the independent broker-dealer industry in our annual “Independent Broker-Dealer Review and Ranking.” It’s a detailed portrait on how a business addresses two challenges: limited growth and advisor retirements.

Against these headwinds, IBDs have enjoyed some favorable tailwinds, including a 15-year bull market in equities and, more recently, the end of the era of near-zero interest rates. The latter has provided them with a chance to earn more money on so-called sweep accounts, usually a place clients park cash for future bills like taxes, tuition and mortgage payments and vacations.

This, of course, is a double-edged sword: Clients once ignored the paltry yields on sweep accounts since interest rates paid zilch, but they have started sorting their cash and directing more money into money markets and other vehicles where they can capitalize on today’s higher rates. This month, many clients will be seeing higher tax bills on those accounts.

IBDs are also moving into the RIA space, with a growing number of firms describing themselves as giant RIAs with a legacy B-D business. But as outgoing Raymond James CEO Paul Reilly said earlier this year on an earnings call, it is difficult to justify the prices some investors are paying in the private markets for RIAs when the multiples don’t appear to be supported in public markets.

Placing a value on small firms in a fragmented business is an inherently difficult task. Industry consultants have long said asset management will become a commodity and advisors will thus need to build out new services to deliver value to clients.

This year’s Invest In Women conference proved to be a showcase for some of these services. Speakers like Carolyn McClanahan, Mary Beth Franklin, Michael Kitces and dozens of other advisors explored ways to solve client problems in depth. For those of you who missed the event, you can read several stories starting on page 29 and many more on our website.

Advisors are going to need more services in the coming decade. It’s hard to imagine clients expecting less.                

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