Financial advisors are turning their backs on traditional wirehouses, bank brokerages and independent broker-dealers at rapid pace, according to a new report from Charles Schwab, opting instead for a hybrid model that allows them to serve as both an RIA advisor and a registered rep and expand their pool of potential clients.

In its latest Schwab Market Knowledge Tools report released last week, the mother ship for more than 6,000 independent RIAs reports that headcount at firms with dual-registered advisors is expected to increase from 4.2% in 2009 to more than 7.7% by 2014 while advisors working at RIA-only shops will grow from 5.9% to 10.1% over this same period.

Meanwhile, the number of advisors and reps working at wirehouses, IBDs and insurance and bank broker dealers is expected to slightly regress or remain flat over the next four years. This migration has steadily increased throughout the intense consolidation seen in the bank and brokerage industry overall in the past several years as the number of dually registered hybrid firms has surged at a compound annual growth rate of 14.7% between 2004 and 2009.

The primary reason, beyond the bleak macroeconomic climate and cultural upheaval -- particularly the ascent of fee-based platforms at the expense of commissions -- that's prevailed in the past five or six years, is financial advisors need to expand their revenue opportunities by offering a wider range of investment products and services.

Schwab knows of what it speaks considering that more than half of all the advisors who took the independent route in 2009 and 2010 opted to set up a hybrid practice or either the so-called "semi-captive" variety -- in which advisors signs on with a corporate RIA of an IBD -- or as dually registered advisors who join an independent RIA or starts one themselves.

"Ultimately, the decision to adopt a hybrid practice model and determine which flavor is the right one comes down to an advisor’s business philosophy and objectives," Nick Georgis, vice president of Schwab Advisor Services, said in the report. "Once things like investment approach and mix of investments, desired revenue model, and ideal client profile are in place, an advisor is in a good position to determine the right path to take."

Last year, Schwab Advisor Services saw 163 advisory teams managing more than $12.6 billion go independent. Of these, the number that came from independent broker-dealers rose 45% from 2009.

This trend, and the inherent the pressure it puts on firms to entice and retain experienced and client-rich advisors, has forced even the stodgiest of old-school firms to ramp up their technology investments, broaden their investment product portfolios and even delve into the great unknown that is social media.

Pershing LLC last week issued an eye-opening report suggesting that while most of the best financial advisors are rapidly closing in on retirement -- just as so many Baby Boomers are entering it themselves -- most firms have done a less-than-stellar job of evolving their business models and day-to-day operations to attract the next-generation of rainmakers.

"The most exciting developments we are seeing that relate to attracting talent are from firms that are developing a value proposition that embraces the hybrid opportunity," said Jim Roth, managing director at Pershing. "We’re seeing significant growth and activity in this area."

Knowing this, Schwab in 2010 became the first independent RIA custodian on the NFP IndeSuite platform which gives independent RIAs the ability to manage both traditional brokerage and fee-based advisory businesses through one application. Advisors can access a central location to make client trades, manage their portfolios and receive compliance and back-office billing and support.

"Advisors transitioning to independence are looking to move away from proprietary models that lack the flexibility they need to run their business and better serve clients," Georgis said. "In building our offer for hybrid advisors, we think it is important to provide what advisors want -- an open architecture approach in which the custodian doesn’t dictate which broker-dealer partner an advisor will use."

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