The independent channel, which includes registered investment advisor firms, independent broker-dealers and dually registered advisors, is gaining market share at the expense of wirehouses, according to a new report from Cerulli Associates, Advisor Migration: The Changing Landscape of Retail Distribution. The independents will nearly match wirehouses' market footprint by 2012, with a 39.3% market share of assets under management compared with the wires' 40.7%, the report predicts.

This year's decline by wirehouses is part of the industry's overall advisor migration, which will put $800 billion of client assets in play. Wirehouses could lose as much as $188 billion in client assets. The channel's market share of assets under management will be at 40.7% by 2012, down from 47.7% as of year-end 2008, according to the report.

The downward trend will continue as more advisors seek out the independent channel. Scott Smith, senior analyst at Cerulli and author of the report, says the main driver behind these moves is brand erosion. "There's a lot of investor dissent [at the wirehouses]. Some advisors told me that their clients said, 'What took you so long?' when they moved."

RIAs and dually registered advisors will receive the largest share of the assets lost by wirehouses, Smith says. The independent channels are projected to account for 39.3% of assets under management by 2012, nearly equalling the assets at wirehouses.

"Wirehouses are-and will continue to be—the distribution powerhouses for asset managers. But the independent channels should garner more attention as they continue to gain ground with more advisors migrating toward independence," Smith says.