Retail Direct Channels Are Gobbling Advisors' Market Share: Cerulli

In 2021, assets in the retail client channels were nearing an even split with institutional client channel assets, according to Cerulli’s research. The split widened in 2022 — 47.7% to 52.3% — with the large equity market correction from which institutional client channels, which tend to have more fixed income allocations, were insulated.

Last year, the trend of retail channels growing faster than institutional channels resumed, with the former’s market share standing at 48.2% and the latter’s at 51.8%.

Higher equity allocations are one reason that retail client assets are generally growing faster than institutional client assets, but other factors are also at play. For example, as corporate defined benefit plans freeze and terminate, Cerulli projects that the channel will have a five-year compound annual growth rate of just 1.2%.

According to the research, retail direct investor platforms control the largest portion of exchange-traded funds and mutual funds across all channels, although the channel lost some of its mutual fund asset market share in 2023.

Cerulli opined that the financial advisor’s role must keep changing in order to prioritize offerings beyond just investment management.

“Providers of products, technologies and services to financial advisors must develop and market offerings that serve the changing needs of advisors who seek to slow the bleed from their advisor-intermediated channels,” Apkarian said.