Number of RIAs Grew 3.3% Last Year while Broker Count Continues to Slide
The number of SEC-registered investment advisers grew 3.3% to 12,993 over the past year, while total clients they worked with increased 26.4% to more than 43 million, according to a new study from the Investment Adviser Association and compliance consultant National Regulatory Services.
The number of broker-dealers registered with the Financial Industry Regulatory Authority fell by a net 130 in the past 18 months to 3,596 firms as of July, according to a Finra website. The number of individual brokers registered with Finra declined in the first six months of the year by 4,720.
Assets managed by SEC-registered RIAs have increased at a compound annual growth rate of 8.2% since 2001 to $83.7 trillion as of April, according to the RIA study, which was based on April 2019 Form ADV filings with the Securities and Exchange Commission. AUM grew 1.4% in the previous 12 months, despite significant market declines in December 2018, it said.
“Our profession is experiencing continued growth as increasing numbers of investors recognize the value of fiduciary advisers,” said Karen Barr, president of the IAA, which is a trade group for RIAs.
Although SEC-registered RIAs generally have over $100 million of assets (smaller advisory firms are regulated by states), the vast majority are small businesses. Over half employ 10 or fewer non-clerical employees and 87.5% have 50 or fewer such employees, according to the study.
They also tend to work with smaller accounts than counterparts at broker-dealers. Clients classified as “non-high net worth individuals” represented 82.2% of the 36 million total clients serviced by RIAs as of April and 87.0% of their individual clients.
In contrast, more than 40% of Morgan Stanley’s wealth management assets come from clients with $10 million or more, wealth management head Andy Saperstein said in June.The new report conceded that the 26%-plus growth in number of RIA clients over the past year reflect in part the growth of digital advice platforms, which have many clients with small or zero account balances.