Some of the largest fee-only registered investment advisory firms in the country, measured by the number of financial advisors they employ, would likely qualify as small businesses.
The ranking below, based on Financial Planning's 2022 RIA Leaders study of the largest fee-only RIAs that provide financial planning services, tracks firms with the most advisors based on the number of investment advisory representatives disclosed to the SEC. Using the standard industry fee of 1% of assets under management as an estimate of annual revenue, several firms in the the group of 20 RIAs would fall under the federal Small Business Administration limit of $41.5 million per year for firms providing "portfolio management and investment advice."
That classification determines whether the RIAs would be eligible for certain tax breaks as well as government loans and contracts. The small businesses on FP's list of the largest fee-only RIAs may not be classified that way for long, though. RIAs of all kinds are growing and had a record $128 trillion in AUM by the end of last year, according to one recent study.
A sampling of the dizzying number of recruiting and M&A deal announcements from the past week alone underscores the constant movement of client assets and advisors amid record consolidation: Journey Strategic Wealth recruited three teams managing $210 million in client assets; SageView Advisory Group agreed to acquire a $415-million practice; Independent Advisor Alliance purchased a minority stake in a firm with $763 million; and Moneta Group Investment Advisors opened a Chicago office for its fourth new market of the past four years.
Earlier this month, Signature Estate & Investment Advisors completed its transaction in which it sold a majority of itself to private equity firm Reverence Capital Partners. The $16-billion RIA also received an investment from wealth manager Advisor Group. Los Angeles-based Signature has set a goal of reaching $50 billion in client assets over the next five years by using its first outside infusion of capital to fuel recruiting, M&A and expansion of its turnkey investment management strategies, according to CEO Brian Holmes.
The industry's transition from brokerage dominance to RIAs is "continuing, and it's going to build momentum," Holmes said in an interview about the firm's goal. "We believe it's very achievable with the new platform."
In a reflection of the complexity of ranking fee-only RIAs, Holmes' firm is one of thousands of RIAs large enough to qualify for FP's RIA Leaders ranking but outside of the strict criteria for inclusion. Although only about 3% of its business comes from transactional brokerage revenue as opposed to advisory accounts, FP's ranking excludes firms that have brokers.
That's partially why some of the names below may not ring as familiar as those of the industry's giants. For the rankings of fee-only RIAs with the most professionals registered with one or more state securities authorities as "investment adviser representatives," scroll down the slideshow.
A listing of the top 20 fee-only RIAs based on assets under management is available here. To read the RIA Leaders cover story, "Financial planning clients are undefined, undercounted and underserved," click here. For a longer PDF showing the top 150 fee-only RIAs in AUM based on FP's criteria, follow this link. To view last year's RIA Leaders feature, click here.
Notes: FP's data partner for the RIA Leaders feature, RIA in a Box, compiled the below data from firms' required SEC Form ADV filings in July 2022 using a six-part criteria.
- Firms must have zero registered representatives of a broker-dealer
- At least 50% of the firm's clients must be individuals or high net worth individuals
- Firms must not list commissions as a compensation arrangement
- Firms must have more than zero financial planning clients
- Firms must not list commission-taking businesses in "other business activities"
- Firms cannot be affiliated under common ownership with commission-taking businesses
