Brooke’s Note: I was first introduced to registered investment advisors when I was hired by InvestmentNews and assigned to cover them in 2000. I was installed in an office in San Francisco, across the street from the headquarters of Charles Schwab & Co. From there I could keep as close a watch as humanly possible on a major nerve center of RIA activity. Occasionally, an RIA would object to some action Schwab took and move some assets to Fidelity or TD Waterhouse. That was pretty exciting, and I’d write about it with great fervor. But often there didn’t seem to be much to write about. Times have changed. Now I’m writing about RIAs and matters relating to them on a daily basis. I’m working hard to keep up with it all. Here’s some commentary and an initial list that may help people interested in RIAs to understand just how many green shoots are springing from soil across the landscape.

Occasionally, an analyst or journalist opines on whether or not they believe that wirehouses will finally succumb to the forces mounting against them.

The idea is that when this final crumbling takes place, men in suits will come spilling out of the ruined wirehouses and brokers will reconstitute themselves as a purer army of RIAs.

It’s an alluring vision no doubt stoked by thoughts of the Berlin Wall. Everybody theses days is a great reader of Malcolm Gladwell and talk of tipping points inevitably enters this conversation.

Something on this order may indeed occur at some point in the future. But it’s far more productive to contemplate the activity at hand in the RIA world rather than some sort of Big Bang theory of RIA universe creation. See also:8 ways that the RIA business is achieving scale at breakneck speed

Toyota and Honda did not wait for the Detroit automakers to crash and burn before taking their share of the U.S. auto market. They just kept producing better cars and let nature take its course. The growth of RIAs [hybrids included] is explosive and what happens to wirehouses is almost beside the point.

1.) The two biggest forces on the retail investing landscape are both putting RIAs at the center of their plans for growth. The Charles Schwab Corp. and Fidelity Investments of Boston have steadily thrown resources into their advisor businesses. Schwab now earns more than half its profits from RIAs, and it has a $1 billion RIA budget. Fidelity will up its technology spending for RIAs by 25% in 2010.

2.) The ways for financial advisors to get a foothold as RIAs in the industry have multiplied. Not only have the big players like Fidelity, TD Ameritrade and Schwab grown to love truly small RIAs [under $25 million of assets under management] as customers again, but a whole industry of new custodians is springing up. Scottrade Advisor Services, TradePMR and Shareholders Service Group are each growing at the rate of about an RIA a day. Because of their size and structure, these upstart custodians are able to bring a kind of dedicated service personnel to the smallest RIAs that the big custodians bring to bigger RIAs. Other small custodians like Trust Company of America of Denver, Colo., are also creating a richer spectrum of choices for RIAs with specialized needs. Trust has a technology and pricing geared toward RIAs that want to serve as turnkey asset managers for teams of representatives.

3.) Another world of custodians is emerging in the form of companies like Pershing, State Street and the Royal Bank of Canada. There are plenty of RIAs who want to do business with giant banks with industrial-strength persona and capabilities. These companies maintain edges in areas like international investing because they can offer more extensive trading in foreign securities. State Street remains a bit of an enigma in the industry and seeks RIAs with $500 million or more. Pershing is coming on like gangbusters with Mark Tibergien as its CEO and seeks RIAs with $100 million or more. RBC will close its deal to purchase the RIA custody unit of JPMorgan in June and it looks like it will aggressively seek market share after that. It has a breakaway strategy and it’s also seeking RIAs with $100 million or more of assets.

4.) Wall Street keeps winning battles over the RIA-minded advocates in Washington but RIAs may be winning the war. This is lamentable. Consumers deserve better and it’s enough to make us all cynical to realize that even a scare that included bank blow-ups and executive-pay scandals wasn’t nearly enough to throw Wall Street lobbyists off their game. I’m not convinced, however, that these legislative setbacks are retarding the RIA explosion. Detroit automakers’ advocacy allowed the companies to continue making gas guzzlers with abandon. This may have been bad for the environment and fuel prices, but it was good for the companies that forged ahead in making fuel-efficient cars. The fact that a battle over the fiduciary standard is being fought in Washington is itself a victory for RIAs. Consumers — especially the high net worth ones — are rapidly getting it. By allowing a lax standard, lawmakers are ultimately just giving wirehouse brokers the rope they need to hang themselves with.

5.) RIAs may still win the Washington battles that most matter. The Department of Labor is changing its rules in a way that will make it increasingly difficult for a wirehouse broker to make the case for managing 401(k) assets. Over time, IRA assets may also be yanked from their grasp as well. These rule changes are not trivial because the combined pools of retirement assets are valued at about $7 trillion. The total combined assets under advisement by wirehouse brokers is about $5 trillion.

6.) Venture capitalists are starting to pour money into the RIA business. Asset Management Finance of Boston and New York recently invested nearly $100 million into HighTower, a Chicago-based aggregator of big successful hybrid RIAs. In November, Focus Financial of New York announced that it received a $50 million cash injection from Polaris Ventures and Summit Partners, both of Boston. In September, Bessemer Ventures invested $15 million into United Capital of Newport Beach, Calif. When I talked with these venture capitalists, I was told that they were motivated to commit to large investments because they had competition from other venture capitalists.

7.) The quality, quantity and diversity of technology companies serving the RIA industry is becoming substantial. A landscape dominated by Advent Software and Schwab PortfolioCenter, both of San Francisco, now legitimately includes companies like Orion Advisor Services of Omaha, Neb. and Black Diamond Performance Reporting of Jacksonville, Fla. Other companies like FinFolio –the second coming of Techfi under Matt Abar — are knocking at the door. There is also a whole industry of CRM makers springing up as well as makers of financial planning software. Better yet, the industry is starting to get serious about making all of this technology work together. The Technology Tools for Today conference is one example of advisors and vendors meeting to achieve this industry goal. The FPA Business Solutions 2010 conference was another such gathering. Both conferences reported record attendance and sold-out exhibit halls this winter.

8.) The big independent broker-dealers are throwing their weight behind the RIA industry. Raymond James was an early dabbler in RIAs, but LPL Financial is rapidly making up for lost time both with its marketing message and its supporting RIA custody technology. It now has about $10 billion of RIA assets, up from $1.4 billion at the start of last year. Royal Alliance recently reported winning a hybrid RIA with more than $2.5 billion of assets. Cetera – a venture capital-backed aggregation of former ING broker-dealers – recently hired Barnaby Grist and another former Schwab Advisor Services executive, Jay Quinn, to head their business development efforts. There can be little doubt that RIA hybrids are in Cetera’s crosshairs.

9.) Meanwhile, asset custodians like Pershing and Fidelity are also bending over backward to create a hospitable environment for hybrid RIAs. These companies have worked to link their custody platforms to their clearing platforms. These efforts put the opportunity to become an RIA just a toggle away on the computer for hundreds of thousands of independent reps whose broker-dealers use the clearing platforms of Pershing and Fidelity. In January, Schwab revealed that it will also make hybrids a greater corporate priority. See: A giant is awakening in the hybrid market The first sign that Schwab is serious about its mission is described in With Schwab [and maybe Fidelity] as custody partners, NFP is positioned to make a run at the hybrid market

10.) The legal lever that pries brokers away from big broker-dealers is having its own explosive growth. As of last week, there are now more than 450 firms that use the Protocol for Broker Recruitment. Joining the protocol unto itself proves nothing, perhaps. It’s a little like putting an NRA sticker on your pickup truck. But it also may be an important first psychological step before going on a wirehouse-broker poaching expedition.

Editor’s Note: This list is just a warm-up. Click here to read the next 10 things that show the RIA market is heating up