Tracking the record flow of assets cascading into RIAs

Despite the notable fragmentation between them, small and large registered investment advisors are both driving the industry’s record growth.

RIAs remain largely an industry composed of small businesses and top-heavy giants that collectively manage trillions of dollars in assets, according to an annual study released last month by the Investment Adviser Association and ComplySci’s NRS. The eight graphs below show how much and how quickly SEC-registered RIAs are expanding.

With record consolidation and greater resources affording the largest firms more scale than the smaller advisory shops scattered across the country, the giants gather the most assets and, often, the most attention. However, more than half of RIAs have 10 or fewer employees, and almost 90% have a staff of 50 or fewer, according to the study. 

They face challenges when competing for clients against the likes of Goldman Sachs Personal Financial Management, according to Joe Duran, who sold his pioneering RIA firm United Capital to Goldman for $750 million in 2019. Now the head of the Goldman unit, Duran predicts the record numbers of RIAs and AUM will keep going up in the future.

“It's easier to be independent than it used to be,” he said. “Custodians are great. There are lots of investment solutions, but the world's becoming more complicated. People want their life simplified. And so what you'll notice, I think, is that there's going to be a confluence where every advisor, whoever you are, is going to need to offer more and more services for less and less price.”  

With that backdrop, the sheer figures give a glimpse of the scale being delivered by RIAs, as of the end of last year. The number of RIA clients ballooned by 47% between 2018 and 2021, and the AUM rose 80%, the report shows. The onslaught of inflation and stock volatility this year will carry an impact, though, according to Investment Adviser President Karen Barr and NRS President John Gebauer.

“Next year’s report could have a different tenor,” they wrote in the report. “But whether growth or recession, up markets or down, the investment adviser industry is an important employer and a vital contributor — providing an essential service to the investors in them.”

Scroll down to see eight charts displaying the most interesting takeaways for financial advisors and other wealth management professionals from the report. To see a study predicting the movement of client assets over the next several years, click here.

Note: All facts and figures include only SEC-registered RIAs. The data comes from the “Investment Adviser Industry Snapshot 2022” report released on June 23 by the Investment Adviser Association and National Regulatory Services (NRS), a ComplySci company.