The Securities and Exchange Commission (SEC) recently released a comprehensive data report detailing the impressive growth of the registered investment advisory (RIA) sector. This publication marks the beginning of an ongoing initiative to provide annual updates, enhancing transparency and insight into the industry.
"Providing accessible, usable, aggregated data to the public is a critical part of the SEC’s role," states Chairman Gary Gensler. "This new report will give the public a clearer view into the investment advisory industry," he added, emphasizing that reports like the RIA statistics "help the public better understand how our economy and securities markets function."
By nearly every measure, the RIA industry's expansion is a notable success story, with many wealth managers transitioning from traditional brokerage firms to join established RIAs or launch their own.
The SEC’s report is based on an analysis of Form ADV filings, which advisors are required to submit to the commission and update annually. These filings provide a “uniquely comprehensive view of the asset management industry,” according to Tim Husson, head of the analytics office at the SEC’s Division of Investment Management. “The statistics in this report illustrate the phenomenal growth and changing nature of the advisory business and will help inform public policy in this space,” Husson adds.
Here are four key metrics that highlight this thriving industry:
Firms Proliferate: The SEC reported that there were 15,441 advisory firms registered with the commission in 2023, marking a 35% increase from 2009, the first year for which the SEC provided data, when there were 11,458 firms.
These totals exclude exempt reporting advisors (ERAs), which typically operate in niche areas such as private funds or venture capital. The SEC noted there were 5,762 ERAs last year. Combined with traditional advisory firms, the total number of advisor firms reached 21,203 in 2023, slightly down from 2022 but still near the peak of a significant growth trend over the past 15 years.
Assets Balloon: Contrary to what might be expected from the growth in the number of firms, the volume of client assets under advisement has increased at an even faster rate. Last year, advisors reported managing $128.8 trillion in regulatory assets under management, a staggering 227% increase from $39.4 trillion in 2009. The SEC reports that advisors managed over 91% of these assets on a discretionary basis.
Head Count Grows: Employee and advisor headcounts have also seen steady growth in recent years, although not at the same rapid pace as asset volume. In 2023, RIAs reported a total of 1,005,900 nonclerical employees, a 31% increase from 768,000 in 2009.
Firms reported having 531,400 employees with advisory functions last year, up 59% from 335,000 in 2009.
Private Funds Are Big Business: Private investment vehicles have become a favored strategy for advisors working with high-net-worth clients, with ongoing efforts to broaden access to these instruments for less-affluent investors.
The surge in private funds has created substantial opportunities not only for advisors working with wealthy retail clients but also for those advising the funds themselves. The SEC reported that advisors managed over $23.5 trillion in private fund assets, up from approximately $8.2 trillion in 2012.
The commission counted 56,216 RIA-advised private funds, more than double the number in 2012. By category, RIA-advised hedge funds held the most assets, with nearly $10.5 trillion, followed by private equity funds with about $8 trillion. The SEC noted that RIAs advised 26,045 private equity funds last year, significantly outnumbering the 11,295 hedge funds advised by RIAs.
