The DOL rule may be dead for now, but the fiduciary genie is out of the bottle. Watching regulators at the SEC twist themselves like pretzels to try and come up with an alternative that makes sense may be a concern, but investors still are voting with their dollars and flocking to RIA firms.

As Christopher Robbins reports in this year’s RIA Survey on page 46, advisors in this space are enjoying impressive growth, thanks to two factors. First, their business model resonates with investors. Second, many ex-brokers at wirehouses continue to recognize the appeal of fiduciary relationships and leaving big national firms to go independent. In our survey, more than 31% of firms said they had hired a broker in the last three years.

With demand for financial advice exceeding the supply of advisors, RIAs are thriving. Strong financial markets are helping.

But challenges abound. Rapid advances in technology are forcing many firms to make major investments.

It remains to be seen whether robo-advisors pose a serious threat. Schwab CEO Walt Bettinger has hinted they don’t and he operates one of the nation’s largest robos. Other Schwab executives have told me they tend to lose retail business to advisors when client accounts reach the $1.5 million area.

As Eric Rasmussen reports on page 32, a growing number of advisors are borrowing parts of robo-platforms and incorporating them into their business. Most don’t have full-fledged, end-to-end robo services but they are managing to boost their own profitability dramatically.

Scale is increasingly important. Only 4% of RIA firms have over $1 billion, but they control 62% of assets in the space, according to several estimates.

Merger conversations are on the rise, but for many firms it is still more talk than action. Fully 41% of the firms in the survey said they had engaged in merger discussions in the last three years, but 24% said they had rejected a merger proposal.

The issues driving all these trends aren’t going away. But the success of this business isn’t either.           

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