The number of SEC-registered investment advisors and the aggregate assets they managed both reached record highs in 2021, according to the “Investment Adviser Industry Snapshot 2022,” a comprehensive report jointly released Thursday by The Investment Adviser Association (IAA) and National Regulatory Services (NRS).
Assets managed by SEC-registered investment advisory firms increased by 16.7%, with a record 14,806 firms managing $128.4 trillion in assets for a record 64.7 million clients while the number of advisors grew by 6.7%
Investment Adviser Industry Snapshot 2022
Assets managed by SEC-registered investment advisory firms increased by 16.7%, with a record 14,806 firms managing $128.4 trillion in assets for a record 64.7 million clients while the number of advisors grew by 6.7% according to this year’s report. More than 88% of these advisors work in smaller firms with 50 or fewer employees.
The number of people RIA firms employed also reached a record high in 2021 of more than 928,000 non-clerical employees.
The report found growth in assets, the number of advisors, and average assets per advisor was especially strong in 2021, reflecting the economic rebound driven by the post-pandemic reopening and concomitant stock market surge. In each of the past 8 years, the number of SEC-registered investment advisors has increased, while the number of brokerage firms has declined.
For more than two decades, this co-authored annual survey, previously titled Evolution Revolution, has provided the industry, regulators and legislators with key facts and figures about this sector of the financial services industry.
“The results of the 2022 Snapshot confirm investors recognize the value of fiduciary advice in helping them meet their financial goals, whether planning for retirement, saving for homeownership or funding an education,” said IAA President and CEO Karen Barr. “With the vast majority of firms employing 50 or fewer people, it’s clear small businesses serving individual investors are the backbone of the investment adviser community.”
More key highlights
• Individual investor demand for advice is surging. All client segments continue to grow in number. In 2021, the number of clients increased by 6.4% – reaching a record high of 64.7 million.
• The investment advisor industry is a Main Street profession. Most investment advisors (88.1%) are small businesses with 50 or fewer employees and one or two offices. Factoring in assets, two-thirds of advisors both employ 50 or fewer people and manage less than $1 billion in assets. The median advisor operates from a single office and has mostly individual clients, eight employees, and $412 million under discretionary management.
• Strongest growth in the South. Over the past two years, gains in advisors based in the South have outpaced gains in other parts of the country. The growth in Florida was the strongest in the nation, while New York numbers have fallen. More granularly, growth in the industry has been focused in states that have not been traditional financial centers, such as Texas and Florida. The number of advisors in these states grew significantly during the pandemic.
• Asset growth was highest for the largest advisors. Advisors with more than $100 billion in assets experienced compound annual growth in assets of 14.9% over the past four years—far ahead of advisors with $100 million to $5 billion in assets under management, who saw compound growth of around 6% over the same period.
• The number of private funds accelerated. The number of private funds grew by 15.2% in 2021. Growth was in the double digits for all types of private funds, except hedge funds and liquidity funds.
“This year’s report underscores the diverse nature of the industry and its tremendous growth, most notably in terms of the number of individuals and the number of private funds. These trends are clearly having an impact on the SEC’s focus areas for examinations and rulemaking, as evidenced by the proposals made earlier this year which aim to increase protections for private fund investors,” said NRS President John Gebauer.
The IAA is the leading trade association representing the interests of fiduciary investment advisor firms, with member firms collectively managing more than $35 trillion in assets for a wide variety of institutional and individual investors.NRS, a ComplySci company, is an advanced provider of compliance and registration products and services for investment advisers, broker-dealers, hedge funds, investment companies and insurance institutions.
The full Investment Adviser Industry Snapshot 2022 can be viewed and downloaded from the IAA website or by going to nrs-inc.com.
SEE ALSO:
• The RIA Industry Experiences Steady Growth
• Top 3 Areas of RIA Service Expansion: Cerulli