The total RAUM managed by the 12,578 SEC-registered advisers has grown 16.7% from 2017 to $82.5 trillion, most likely due in great part to strong stock market performance in the past year. In fact, the largest advisers (those managing over $100 billion in RAUM) had the largest percentage increase in growth this year, showing an 18.6% increase year over year, growing from 124 to 147 firms. Despite accounting for only 1% of all SEC-registered advisers, these 147 firms collectively managed 59% of all reported RAUM, while 70% of all advisers managed less than $1 billion RAUM and they collectively managed only 3% of all reported RAUM.
While it’s natural to focus on the growth in both the number of advisers and the assets they manage, what’s just as interesting is the fact that over 80% of SEC-registered adviser clients are non-high net worth individuals; proving that individual investors (as opposed to institutions, funds) are the backbone of a great many advisers’ practices.
The SEC recognizes this, and through newly added Form ADV Part 1 questions, is gathering more data on individual separately managed accounts (as opposed to mutual funds, ETFs, or other pooled investments).
In addition, the new Form ADV requires advisers to list all firm website addresses and the address for each of the firm’s social media platforms. The data collected for Evolution Revolution shows that LinkedIn was the most popular platform with one third of all advisers having at least one LinkedIn page. Facebook and Twitter are the next most popular platforms.
Interestingly, this growth in the use of social media is being made despite the compliance challenges inherent in interactive platforms. All of these platforms most likely meet the SEC’s definition of an advertisement, so advisers must apply rules created over 50 years ago to these new avenues of communication. Yet, advisers continue to use social media to increase their outreach to investors, including a younger generation of investors who no doubt account for some of the 80% of non-high net worth individual clients.
To find out more about adviser responses to other new Form ADV questions and interesting industry data, download a copy of this year’s Evolution Revolution!