Registered investment advisors’ assets under management increased 13.4% from April 2009 to April 2010, or $4.6 trillion, according to the Investment Adviser Association/National Regulatory Services’ Evolution Revolution 2010 report.

The number of RIAs was also up: the Securities and Exchange Commission now has 11,643 RIA entities on the books, a slight increase from last year's 11,257, but David Tittsworth, executive director of  IVA in Washington, D.C., said that increase in headcount isn’t large enough to account for much asset growth. “The was some growth, but not compared to previous years,” he said. “The direction of advisors’ assets is primarily a function of the markets doing better.”

However, Tittsworth sdaid that RIA assets still have a way to go to gat back to their peak of  $42.3 trillion in 2008. “They took a huge hit in 2009, although I’d say $4 trillion growth in 2010 is a healthy bump,” he said.

RIAs can be individuals or firms; many banks’ retail investment units whose advisors provide fee-based accounts are RIAs, for example. The largest RIAs dominate the assets under management. Only 508 firms, or 4.4% of the total population of RIAs, manage more than $10 billion in assets, but these firms account for 83.3% of all RIA assets, or $32.1 trillion. Most RIAs, 82.8%, manage less than $1 billion in assets.

IVA/NRS has 10 years of data on RIAs from the SEC but next year things could look very different, thanks to the Dodd-Frank Act. In the mid-nineties, Congress stipulated that financial advisors (not brokers, who are policed by FINRA) should register with the SEC if they managed $25 million or more. Under a current and dramatic change in the law, Congress now only wants advisors with $100 million or more in assets to answer directly to the SEC. Advisors who manage less than $100 million, 4,228 in all, will now report to state regulators, who have long argued they can do a better job policing advisors than can the over-stretched SEC staff.

At the same time, Dodd-Frank will require all hedge fund and private equity fund advisors with $150 million or more in assets to register with the SEC by July 21, 2011. Tittsworth said no one knows how many of these advisors there are, but he estimates they number anywhere between 1,000 and 2,000.

Meanwhile, the SEC also has the matter of the fiduciary standard to handle. Commissioners seem to be leaning toward imposing some form of fiduciary requirement, but with a perpetual staff shortage, the SEC doesn’t really have the manpower. “The jury is still out,” said Tittsworth, until the SEC delivers its report to Congress (deadline Jan. 21, 2011) and starts the rulemaking process.