Tiburon says the fee-based space is little understood and poorly enumerated. Tiburon Strategic Advisors is out with an update of its 2007 report on the fee-only advisory business, a hot but little-understood growth channel that features inaccurate counting and misunderstood data.

The number of SEC -registered RIAs or fee-only advisors -- we're talking firms here; so they might be more clearly termed advisories -- has grown to 10,466; an increase of more than 40% since 2004. There are also approximately 11,919 state-registered advisories. There are about 43,000 "advisor partners" -- let's just call them advisors -- working at these firms.

27,000 by 2012

The main thing about the number of fee-only firms is that it hasn't grown much since 2002, when there were -- SEC and state registrants taken together -- about 19,500. And Tiburon, a Tiburon, Calif.-based market-research and consulting firm, sees fairly flat growth to around fee-only 27,000 firms with 55,000 advisors by 2012.

Even if growth in the number of fee-only firms is leveling off, however, they're bringing in more money. RIAs saw revenues of $30 billion in 2007, a 17% increase over 2006, and they earned about $15 billion, a 7% hike over the previous year.

Here are some more data points from the Tiburon study.

RIAs account for about 35% of all fee-only and fee-based advisors, and they have 25% fewer accounts than fee-based and commission-only advisors. Half of all fee-only advisories have assets under management under $25 million, and half of all fee-only assets are managed by about 2,000 firms. A third of fee-only assets are retirement-plan rollovers, and another third is moved in from an unaffiliated brokerage. More than 75% of all RIAs clear trades and custody assets with one or more of the major clearing agents with Schwab (5,100 fee-only advisors), TD Ameritrade (4,400) and Fidelity (3,800) as the big three in the space Most fee-only advisories see offering wealth-management services -- open-architecture investment platforms, investment-manager research, dynamic reporting and depository and trust services -- as key to attracting high-net-worth clients.

By 2012, Tiburon sees the average advisor compensation rising to $1.1 million, the number of fee-only firm clients will rise to 3.2 million, with around 119 clients per firm and 58.1 clients per partner. The average assets under management will rise to $310 million per firm. -FWR

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