The lion's share of the growth is being captured by the biggest firms, said Welsh. He thinks fewer than 20 percent of the 15,000 RIAs in the U.S. are generating more than 80 percent of the asset growth. Many of the pioneer firms in the industry are now managing billions in client assets.
"This used to be a cottage industry, and now some firms are bringing in business equivalent to a wirehouse branch office every year," Welsh said. "The top firms have figured out their processes and procedures, and clients are attracted to that."
The fee-only wealth management industry is not without its issues, however.
For one thing, RIAs are an old bunch. A large proportion of the approximately 15,000 RIAs are solo practitioners now more than 60 years old, and the majority of them manage less than $100 million in assets. While custodians such as Schwab have been hammering on the succession issue with their advisors for years, most solo practitioners don't have an heir apparent when it comes to carrying on their practices.
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"It's still a looming problem in the industry," said Alois Pirker, a senior analyst with Aite Group. Those smaller RIAs are also not investing in the technology and systems they need to remain competitive in the future, he said. "The technology is there, but it comes at a price, and a lot of small RIAs are not making the investments."
There's also the emergence of the robo-advisors, Web-based services that do rudimentary financial planning, generate asset allocation plans and select investments for investors. Schwab itself launched its own robo-advisor, Intelligent Portfolios, early this year.
As a group, robo-advisors manage a tiny fraction of the assets that RIAs do, but the low-cost and improving functionality of the service may undermine the value proposition of RIAs and put pressure on their fees in the future.