Washington, D.C./New York – June 20, 2024 – The number of SEC-registered investment advisers reached a record high in 2023 of 15,396, according to data from the Investment Adviser Industry Snapshot, a joint effort by the Investment Adviser Association (IAA) and COMPLY.
The survey showed continued growth in the number of asset management clients, with 56.7 million clients in 2023, a 4.4% increase over last year. The number of total clients also increased by 3.5% over last year.
Assets under management also gained traction, rebounding 12.6% in 2023 and matching the record high of $128.4 trillion set in 2021.
And, for the first time ever, non-clerical employment passed the 1 million mark, growing 3.6% and reaching a record high of 1,006,471 employees.
“The past year again illustrates the important role that the investment adviser industry plays, both by providing crucial advice to investors and as an essential contributor to the markets and the economy,” said IAA President and CEO Karen Barr. “Individual investors increasingly recognize the value of fiduciary advice as they seek to save and invest for retirement, home ownership, education, and other goals.”
This year’s Snapshot also painted a portrait of the broader investment community. In 2023, there were 16,296 advisers registered with state authorities. These advisers managed assets for over 830,000 individuals, located almost entirely in the United States. Individual clients accounted for more than 97.0% of the advisers’ total clients, and nearly 90.0% of the advisers’ $417.1 billion in assets under management.
In addition, there were 5,390 exempt reporting advisers filing Form ADV with the SEC and 3,920 exempt reporting advisers filing Form ADV with state authorities. These advisers managed over $6 trillion in private fund gross assets.
By the Numbers:
- 92.7% of advisers employed 100 or fewer employees
- 69.3% of advisers managed less than $1 billion in assets, and 88.5% managed less than $5 billion
- Advisers focused on individuals as clients were likely to be small, with an average of just 9 employees, 2 offices, and $365 million in assets under management
- Advisers with less than $1 billion in assets accounted for almost all the new SEC registrations, with new registrants accounting for 10.0% of firms in this size range
- On average, a state registered adviser has 2 non-clerical employees, 52 clients, and $26 million in assets under management.
This year’s report again paints a picture of a vibrant and vital industry:
- The industry continued to grow. The number of advisers climbed for the twelfth year in a row to another record high during the year, while assets under management rebounded with the markets to their 2021 level. And, for the first time, the number of non-clerical employees surpassed the 1 million mark.
- Individual investors are increasingly seeing the value of the fiduciary advice offered by investment advisers. Investors are increasingly engaging investment advisers, which continuously provide investment management advice as fiduciaries, putting their clients’ interests ahead of their own. Over the past 6 years, over 24 million more individuals have engaged an investment adviser for asset management – a rate of growth in the number of individual clients of 12.8% per year and in assets managed for those clients of 15.1% per year.
- Regulatory change looms large. Rule proposals from the SEC have the potential to lead to significant industry change. For example, the safeguarding proposal would subject over 5,000 additional advisers – more than one-third of the industry – to custody requirements.
- Nearly 20% of SEC registered advisers are affiliated with another SEC registered adviser. These advisers formed 1,015 affiliated adviser groups. On average, these affiliated adviser groups are composed of 3 SEC registered advisers and have $95.0 billion in assets under management. However, while these groups are large on average, they vary significantly in size, and standalone advisers can also be quite large.
- In total, state registered advisers have an estimated 289,000 financial planning clients. They also have over 218,000 clients that use services other than asset management. In addition to their focus on individual investors, the most notable feature of state registered advisers is that they are quite small.
“The 2024 Snapshot highlights just how significant of a segment SEC private fund advisers, and closely related exempt reporting advisers, represent in today’s market, with a whopping combined $29T in regulatory assets under management. With such influential market impact, it is understandable that the SEC has perceived a regulatory gap and targeted these firms with rulemaking in the last few years,” said COMPLY Chief Regulatory Officer John Gebauer. “Given the recent ruling that vacated the Private Funds Reforms Rule, it will be interesting to see how the SEC responds. It is clear, though, that private funds have broad appeal in today’s market, and they will likely continue to grow faster than the industry average.”
The full Investment Adviser Industry Snapshot 2024 can be viewed and downloaded from the IAA website or by going to the COMPLY website.
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About the Investment Adviser Association
The Investment Adviser Association (IAA) is the leading trade association representing the interests of fiduciary investment adviser firms. The IAA’s member firms collectively manage more than $35 trillion in assets for a wide variety of institutional and individual investors. In addition to serving as the voice of the advisory profession on Capitol Hill and before the SEC, DOL, CFTC and other U.S. and international regulators, the IAA provides extensive practical and educational services to its membership. For more information, visit investmentadviser.org or follow us on LinkedIn and YouTube.
About COMPLY
As a global market leader in regulatory compliance solutions, COMPLY combines the power of regulatory technology, services, and education to empower Chief Compliance Officers (CCOs) and compliance professionals to easily navigate the regulatory landscape. COMPLY enables firms to scale their growth while remaining vigilant in their compliance efforts by providing solutions designed to manage the burden of complex compliance tasks. Our deep bench of industry expertise – which includes expansive knowledge in technology enablement and regulatory compliance protocols and processes – supports more than 7,000 clients, including investment management firms, private equity firms, hedge funds, broker-dealers, registered investment advisers, and other financial service sector participants.
COMPLY continually supports clients in their work to proactively address core compliance challenges – minimizing risk, addressing critical priorities, and meeting new demands as the industry evolves and the firm scales. Learn more at COMPLY.com.