Are Investment Advisory Firms Becoming More Popular Than Brokerage Firms?

The U.S. wealth management landscape is undergoing a significant transformation. For decades, brokerage firms dominated the investment industry, facilitating trades and offering product-driven advice. However, recent trends indicate that investment advisory firms—particularly those registered as investment advisers (RIAs)—are rapidly gaining ground. In some respects, they are outpacing traditional brokerage firms in popularity and growth.

The Surge in Investment Advisory Firms

Recent industry data underscores the explosive growth of the investment advisory sector. As of 2024, SEC-registered investment advisors manage an astounding $144.6 trillion in assets, reflecting a 12.6% year-over-year increase. The number of advisors has also grown to 15,870—a 3.1% rise from the previous year—serving 68.4 million clients, up nearly 7%. This expansion is not just in client numbers but also the breadth of services offered: 45% of advisors now provide comprehensive financial planning, compared to just 33% twenty-five years ago.

Moreover, the industry remains highly entrepreneurial, with 93% of firms employing fewer than 100 people and the median firm managing $393 million in assets. This decentralized model has allowed advisory firms to serve a diverse client base, including non-high-net-worth individuals, and to remain nimble in a rapidly changing market.

Declining Affiliation With Brokerage Firms

One of the most telling trends is the decline in dual registration, where advisors affiliate with both an RIA and a brokerage firm. In 2024, just 15.8% of advisors were dual-registered, a sharp drop from 37.6% in 2001. This shift signals a move away from the traditional brokerage model, where advisors often earned commissions from product sales, towards a fiduciary, fee-based advisory model that prioritizes client interests.

Why Are Investors Flocking to Advisory Firms?

Several factors are driving this migration:

• Fiduciary Standard: RIAs are legally required to act in their client’s best interests, a standard that resonates with investors seeking transparency and trust.
• Holistic Financial Planning: Investors increasingly demand comprehensive advice—covering everything from retirement to tax strategies—rather than just stock picks or trade execution.
• Rising Wealth and Complexity: As the U.S. population accumulates more wealth, particularly among millennials, the need for tailored, holistic advice grows. The number of affluent households is projected to rise 4–5% annually, outpacing general population growth.
• Willingness to Pay for Advice: Nearly 80% of affluent households say they would pay a premium for human advice over digital-only solutions, with this preference intensifying among those with more than $1 million in investable assets.

Brokerage Firms: Still Relevant, But Changing

While brokerage firms remain important, their traditional business model is under pressure. The rise of discount brokerages and fintech platforms has commoditized trade execution, eroding margins. At the same time, many large broker-dealers are pivoting to offer more advisory and planning services, often through acquisitions or by expanding their in-house RIA channels.

Younger Investors Want Human Advice

Contrary to the assumption that younger, tech-savvy investors prefer DIY (do-it-yourself) platforms, recent studies show that a significant proportion of Gen Y and Gen Z investors are actively seeking professional advice from advisors. In 2025, 37% of DIY investors under 40 reported plans to engage a financial advisor within the next year. This trend reflects a desire for guidance in uncertain economic times and a recognition that human advisors can provide value beyond what algorithms and apps can offer.

The Bottom Line

Investment advisory firms are not only becoming more popular—they are fundamentally reshaping the wealth management industry. Fueling their growth is a shift in investor preferences toward fiduciary advice, holistic planning, and personalized service. While brokerage firms are adapting by expanding their advisory offerings, the data suggest that the future of investment management will be defined by the continued rise of independent, client-focused advisory firms. For investors and legal professionals alike, understanding this shift is essential for navigating the evolving financial landscape.

Do You Have Losses With An Advisory Firm?

Silver Law Group represents investors in securities and investment fraud cases. Our lawyers are admitted to practice in New York and Florida and represent investors nationwide to help recover investment losses due to investment advisor and stockbroker misconduct. If you have any questions about how your account has been handled, call to speak with an experienced securities attorney. Most cases are handled on a contingent fee basis, meaning that you won’t owe us until we recover your money for you. Contact us today at (800) 975-4345 and let us know how we can help.