Investment Adviser Sector Continues Growth with Record High RAUM and Number of Clients, According to 2019 Evolution Revolution Report.
The federally registered investment adviser profession continues to see healthy growth, with record numbers of firms, employment, client demand and increased regulatory assets under management (RAUM) last year, according to the 2019 Evolution Revolution report. In an investment ecosystem where digital advice platforms and passive investment channels are playing greater roles, investors’ appetite for human-driven investment advice clearly remains strong.
The report found the universe of SEC-registered investment advisers has reached a record high of nearly 13,000 advisory firms – up 3.3 percent from last year’s report – managing $83.7 trillion. 2019 Evolution Revolution also reports strong job growth, with a record total of 835,124 clerical employees – up 3.7 percent from a year earlier, showing the investment adviser profession as a provider of high-quality jobs and an engine for small business creation and growth.
Now in its 19th year, the 2019 Evolution Revolution report is an annual joint study by the Investment Adviser Association (IAA) and National Regulatory Services (NRS), which is part of Accuity. The report offers a comprehensive profile of SEC-registered investment advisers, drawn from April 2019 Form ADV data from 12,993 firms.
“Our profession is experiencing continued growth as increasing numbers of investors recognize the value of fiduciary advisers,” said IAA President & CEO Karen Barr. “This year’s report demonstrates that advisers are continuing to fuel the economy and the capital markets, providing high quality jobs and adding new small business players in the financial services ecosystem.”
“Competition in the financial advisory space is at its highest, as the number of investment advisers and the amount of assets they manage continue to grow to record levels,” said NRS President John Gebauer. “Advisers are responding to increased demand by continuing to use automation and technology to deliver the level of service advisory clients require.”
Key findings in the report include:
- The number of SEC-registered investment advisers reached a record high with 12,993 federally registered advisers, a net increase of 3.3 percent since the 2018 report.
- SEC-registered advisers reported a total of more than 43 million clients, up nine million from last year, which may be attributed in part to digital advice platforms having many clients with small or zero account balances.
- Despite significant market declines in December 2018, RAUM reported in 2019 increased to $83.7 trillion from $82.5 trillion in 2018, a one-year growth of approximately 1.4 percent.
- The RAUM that RIAs now manage has nearly quadrupled 2001 RAUM levels. The total industry aggregate AUM/RAUM has grown 279 percent since 2001 – a compound annual growth rate (CAGR) of 8.2 percent.
- The vast majority of SEC-registered investment advisers are small businesses with 56.9 percent employing 10 or fewer non-clerical employees and 87.5 percent employing 50 or fewer.
- SEC-registered advisers reported a total of 835,124 non-clerical employees – up 3.7 percent since 2018.
Individual clients (94.6 percent of total clients) – in particular, non-high net worth individuals (82.2 percent of total clients and 87.0 percent of individual clients) – comprise the vast majority of clients by a wide margin.
This is the first report that compares new information reported on the amended version of Form ADV Part 1, which became effective on October 1, 2017, giving greater clarity on the detailed business practices of advisers, including details regarding how they invest separately managed accounts, the use of leverage and derivatives, and more accurate data regarding their clients.
About the Investment Adviser Association
The Investment Adviser Association (IAA) is the leading trade association representing the interests of SEC-registered investment adviser firms. The IAA’s member firms collectively manage more than $25 trillion in assets for a wide variety of institutional and individual investors. In addition to serving as the voice of the advisory profession on Capitol Hill and before the SEC, DOL, CFTC and other U.S. and international regulators, the IAA provides extensive compliance and educational services to its membership. For more information, visit www.investmentadviser.org or follow us on LinkedIn, Twitter and YouTube.
Owned by the RELX Group, National Regulatory Services (NRS) is part of Accuity, the global standard for payment efficiency and compliance solutions. NRS is the US leader in compliance and registration products and services for investment advisers, broker-dealers, hedge funds, investment companies and insurance institutions. NRS has the practical expertise, proven capability and unparalleled reach to deliver integrated and effective compliance solutions to a wide range of users within the financial services industry. NRS delivers these solutions through three interrelated offerings – comprehensive education, best-in-class technology and expert consulting services – enabling our clients to meet their regulatory requirements and minimize risk. For more information, visit www.nrs-inc.com or follow us on LinkedIn and Twitter.
Accuity offers a suite of innovative solutions for payments and compliance professionals, from comprehensive data and software that manage risk and compliance, to flexible tools that optimize payments pathways. With deep expertise and industry-leading data-enabled solutions from the Fircosoft, Bankers Almanac and NRS brands, our portfolio delivers protection for individual and organizational reputations.
Part of RELX Group, a world-leading provider of information and analytics for professional and business customers across industries, Accuity has been delivering solutions to banks and businesses worldwide for 180 years.