Independent broker-dealers are outpacing all other B-D industry channels in growing assets, with both institutional and niche-oriented firms fueling the trend, according to a Cerulli Associates report.

Independent broker-dealers (IBDs) have grown assets an annual rate of 11 percent over the past five years, followed by retail bank B-Ds (9 percent), national and regional B-Ds (9 percent) and wirehouses (6 percent), according to the report released on Wednesday.

Moreover, the report found that both the biggest and smallest IBD firms are responsible for much of the growth.

Classifying the IBD industry into four segments -- institutional, niche, true and insurance legacy -- the report found that institutional and niche-oriented firms have been the most successful at implementing strategies to grow assets.

Institutional firms -- including LPL, Raymond James and Ameriprise -- have grown at an 11 percent rate over the past five years, benefitting from national scale, brand awareness and increased advisor recruitment, according to the report. Despite there being only 24 institutional firms, they control 49 percent of the B-D advisor force and 59 percent of the industry's assets.

"These firms continue to benefit from national scale, brand reputation and increasing advisor counts through recruiting efforts and large acquisitions," the report said.

The niche category, which comprises 14 firms that focus on areas like retirement accounts, including Cetera and H.D. Vest Investment Securities, has been growing at a 14 percent clip.

The singular focus of niche firms has led to higher advisor productivity, the report said.

Focusing on specific niches or products "has resulted in the channel’s most productive advisors -- on average, niche IBD advisors manage $50 million per advisor, which is 20 percent more than the IBD channel average ($40 million per advisor)," the report said. 

The insurance-legacy category is  made up of more than 1,100 former insurance company organizations, such as Transamerica Financial Advisors, while the "true" category comprises 300 privately owned B-Ds, including Cambridge Investment Research and Commonwealth, that in many cases were founded by a former advisor and typically tout their advisor friendliness, according to Cerulli.

The growth makes the IBD channel an appealing option for asset managers, Ed Louis, a senior analyst at Cerulli, said in a prepared statement.

“IBDs remain one of asset managers’ most consistent opportunities due to the large number of potential firm partnerships, advisors and accelerating growth from the hybrid channel,” Louis said.

There was a note of caution in the report regarding IBDs and their prospects for continued growth.

The report said that despite the growth numbers, the average IBD advisor is 28 percent less productive than the average BD advisor—38 percent less if you include hybrid registered investment advisors.

If IBDs expect to continue their pace of growth, Louis said, they will need to improve advisor productivity, as well as strengthen succession planning and protect against large teams migrating to the independent RIA model.