The number of advisors regis- tered with the Securities and Exchange Commission continues to rise, reaching 13,494 advisory firms in 2020, a net increase of 501advisors, or 3.9%, over 2019, accordingto the latest poll by the InvestmentAdviser Association.
RIAs’ assets under managementalso shot up to a record $97.2 trillion, reflecting 16.2% growth from$83.7 trillion, in an industry wheremore than 87% of firms are small businesses, states the annual EvolutionRevolution report, written by IAA andNational Regulatory Services to provide a snapshot of the SEC-registeredadvisor universe.
This year’s IAA/NRS report is basedon data from before COVID- 19 wasdeclared a global pandemic in March,IAA and NRS reported.
“The pandemic upended business as
usual for the advisory community and
the entire global economy,” IAA presi-
dent and CEO Karen Barr and John
Gebauer, president & CEO of NRS, said
in releasing the report on Nov. 10.
“Advisory firms implemented their
business continuity plans and pivoted
to a work-from-home posture almost
overnight while continuing to serve
their clients with a calm and steady
hand. As a result of the dramatic shift
in firms operating from many more
physical locations and related changes
in their operational structures, advisors
will need to continue to devote more
resources to technology and continued
operational resilience measures.”
Other notable findings from the report:
• In 2020, SEC-registered advisors
reported a total of 871,971 nonclerical
employees — up 4.4% over 2019. Of these
employees, more than half (451,536)
provide investment advisory servic-
es (including research) — a healthy
increase of over 15,000 since 2019.
• The aggregate RAUM managed bySEC-registered advisors has grown to arecord $97.2 trillion, a 16.2% jump from$83.7 trillion in the 2019 report.
• The vast majority of SEC-registered
investment advisors are small business-
es. In 2020, 57.4% ( 7,749) of advisory
firms reported that they employ 10 or
fewer nonclerical employees, and 87.6%
( 11,819) reported employing 50 or fewer
nonclerical individuals. At the opposite
end of the spectrum, the largest 116
firms employ 53.7% of all nonclerical
• Asset-based fees continue to dominate in the investment advisory profession, with 95.4% of advisors indicatingthis year that they are compensatedbased on a percentage of their assetsunder management.
RIA LESSONS & LEADERS
By Melanie Waddell
Advisory Industry Growth Keeps Chugging
The number of RIAs grew almost 4% since 2019, an IAA and NRS report shows.
Arthimedes/Shutters t o c k 8 Top M&A Trends By Jeff Berman
Issues like the rising valuations of advisory firms and industry chal- lenges tied to the pandemic were
among the topics discussed by execu-
tives from Charles Schwab Advisor
Services, Mercer Advisors and other
firms at the online DeVoe & Co. M&A+
Succession Summit on Nov. 9 and 10.