Hybrid advisors—Cerulli calls them "dually registered advisors"—wear two hats. They operate as investment advisors, typically charging fees for some clients, and as securities brokers, typically charging commissions for others.
As registered investment advisors, they have a fiduciary duty to always act in the best interests of their clients. As brokers, they only have to make sure they recommend investments that are "suitable" for clients.
By Cerulli's latest count, at the end of 2013, there were 24,825 such advisors managing more than $1.1 trillion in assets. The annual growth in assets managed by hybrids between 2008 and 2013 was 14.4 percent, just under standalone RIAs. Headcount over that period has grown by 9 percent annually—making it the fastest-growing segment of the market by far.
"The RIA and dually registered advisor channels are the only ones that had a positive annual growth rate in advisor numbers over the last five years," said Kenton Shirk, associate director at Cerulli Associates. "The growth is mostly from attracting advisors out of other channels."
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Shirk expects that growth rates in both channels could continue rising as advisors migrate from brokerage service models to fee-based fiduciary relationships.