While RIAs continue to consolidate through mergers and acquisitions, the total number of independent advisory firms increases at an accelerating pace, according to a report released on Thursday by San Francisco-based Schwab Advisor Services.

The number of advisors entering the independent space grew by 75 percent between the beginning of 2012 and the end of 2016, according to the report. In 2012, 114 new RIA firms registered with the SEC, compared with 199 in 2016.

“Independent advisors are the growth story in the industry, and the momentum continues,” says Jon Beatty, senior vice presidet for sales and relationship management at Schwab Advisor Services. “It’s clear that advisors are continuing to aspire to reach flexibility and choice within their business model.”

Viewed differently, 2016’s numbers might also signal slowing growth—while the number of RIAs newly registered with the SEC increased from 114 in 2012 to 150 in 2013, and from 131 in 2014 to 189 in 2015, registration activity remained relatively flat for the year.

The 199 RIAs established in 2016 accounted for nearly $55 billion in AUM moving to the independent channel.

“The primary source is those advisors who are leaving the traditional wirehouse business model, with some also leaving from independent broker-dealers and traditional trust platforms,” says Beatty. “Those are the sources of the teams now registering as newly minted independent firms. When it comes to advisors starting their own RIA, I think it’s more a trend of embracing something as an opportunity than running away from something else in another channel.”

Beatty notes that Schwab’s research did not include state registered firms with less than $100 million in AUM, which are not required to register with the SEC. Since analysts from Cerulli have previously estimated that up to two-thirds of independent advisors have $100 million or less in AUM, the expansion of the RIA segment may be understated by Schwab’s findigns, says Beatty.

Over time, larger firms are being drawn into the RIA segment, according to Schwab’s analysis, with firms managing more than $300 million in client assets comprising 25 percent of 2016’s new registrants. The percentage of new RIAs with at least $300 million in AUM at inception has doubled since 2013, according to the report.

As larger firms move into the independent channel, Schwab is registering an increase in RIAs using multiple custodians. More than one-third of the new firms registered in 2016, 34 percent, reported using more than one custodian. In 2015, approximately one quarter of new firms used multiple custodians, and in 2012, only 12 percent of new firms used more-than-one custodian.

“The bigger your team, the larger your assets. These firms may find it easier to work with multiple custodians, or they may have a client base with broader financial needs that creates the necessity for a multi-custodial environment,” says Beatty, who notes that most multicustodial firms use a primary custodian for 80 to 90 percent of client assets, with secondary and tertiary custodians handling the remainder.

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