As much as the industry talks about the M&A happening in the registered investment advisor space, it’s the independent broker/dealer channel that’s experiencing the most consolidation, according to a new report by Cerulli Associates. And that means the largest firms are getting even bigger and controlling a greater share of advised assets.

Cerulli found that the IBD channel now accounts for nearly one-fifth of all financial advisor headcount and 16% of industry assets. It led other channels in year-over-year growth, gaining 21.5% in advisor-managed assets. That’s followed by the RIA channel, at 16.4% year-over-year growth, and the captive B/Ds, at 13.4%. The IBD channel’s five-year compound annual growth rate was also the highest, at 12%.

In addition, the top 10 broker/dealers control nearly 80% of all assets in the channel, up from 74% in 2014. The top five IBDs control 57% of asset market share. As of the end of 2024, that included LPL Financial, Ameriprise’s franchise group, Osaic, Raymond James Financial Services, and Commonwealth Financial Network.

“Assets and advisors have increasingly become concentrated in the hands of the very largest IBDs,” said Michael Rose, director of wealth management at Cerulli, in a statement.

The IBD channel was responsible for some of the most significant deals over the last several years. Cerulli points to LPL’s recent acquisitions of Commonwealth Financial Network and Atria, Osaic’s consolidation of its subsidiary b/ds and acquisition of Lincoln’s wealth business, Cetera’s purchases of Securian Financial and Avantax and J.P. Morgan Chase’s addition of First Republic, as some examples.

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That M&A is driving the total number of IBDs down. As of year-end 2024, Cerulli counts 79 IBDs, down by more than a third from 124 a decade prior.

“We believe that mid-tier IBDs could be challenged to match the platform capabilities and resources offered by the largest firms, especially with the investments in platforms and home-office support capabilities the larger firms are able to offer,” Rose said.

Those investments by the larger firms are driving their advisor productivity higher, the survey found. On average, advisors at the five largest b/ds by AUM manage $165 million, compared to $135 million for advisors at the 25 largest b/ds.

Although the competitive landscape is heating up, Cerulli says that mid-tier IBDs that are nimble, focus on their value propositions and make investments to strengthen their capabilities will survive.  

“Many IBD advisors prefer smaller, more boutique cultures, and the ability to have a direct line to senior decision makers,” Rose said.

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