The Investment Adviser Industry Snapshot, jointly published with the Investment Adviser Association, analyzes the current state of the advisory landscape, highlighting new trends and ongoing growth.
This year’s publication, which addressed both the increased regulatory activity of the past year, as well as the market volatility, which resulted in an over 11% decrease in assets under management, stressed the resiliency of the industry and the advisers therein.
Within your compliance role, be it CCO or compliance analyst, you have likely experienced the impact of many of the trends discussed below. As we head into the second half of 2023 and look towards the 2024 regulatory environment, we will likely continue to see the effects of both regulatory activity and market fluctuation.
What’s happening in the industry? Regulatory compliance trends in 2023
As stated in the 2023 Investment Adviser Industry Snapshot, the following trends or noteworthy takeaways were gleaned from the data.
1. Nearly 40% of advisers include performance information in advertisements.
Advisers provided insights on their advertising practices in 8 new questions added to Form ADV as part of the SEC’s Marketing Rule. Including performance information was the most common practice. See Part 6 | Business Insights for more information.
2. The number of clients using asset management services increased in 2022 to a record high of 54.3 million, a gain of 2.5%.
However, the number of clients using other services, such as financial planning services, declined as digital advice offerings evolved and providers realigned their platforms. As a result, the total number of clients declined by 4.3%, to 61.9 million. See Part 2 | Clients for more information.
3. The number of offices in private residences rose sharply.
The 25.6% increase in 2022 suggests that advisers are transitioning to a permanently remote or hybrid model. See Part 3 | Employees for more information.
4. Private equity funds are growing faster than hedge funds.
Over the past 10 years, both the number of funds and assets under management have been increasing more rapidly for private equity funds than for hedge funds. Private equity funds now account for 44.2% of the number of private funds and 32.8% of private fund assets.
5. Advisers are more likely to serve individuals than any other type of client.
In 2022, 62.8% of advisers had individuals as clients (including 56.0% that serve non-high net worth individuals).
Download the full 2023 Investment Adviser Industry Snapshot to learn more about the evolution of the industry and the regulatory compliance trends shaping the future.