US Investment Adviser Industry grows for ninth consecutive year despite pandemic
Defying the challenges posed by the pandemic, the investment adviser industry continued to experience record-breaking growth with close to 14,000 Security and Exchange Commission (SEC) Registered Investment Advisers (RIAs) managing USD110 trillion in assets for 60.8 million clients.
Those are among the top line findings of the Investment Adviser Industry Snapshot 2021, the re-imagined "Evolution Revolution" report published for the past 20 years by the Investment Adviser Association (IAA) and National Regulatory Services, part of LexisNexis Risk Solutions.
The investment adviser industry continues to experience record growth, with 14,000 SEC-registered advisers
"We are proud of the responsiveness and resilience shown by the investment adviser community as they guided clients through unprecedented challenges," says IAA president & CEO, Karen Barr. "As the industry's consistent growth demonstrates, investors recognise the value of fiduciary advice in helping them meet their financial objectives, whether planning for retirement, saving for homeownership, or funding an education."
According to the report, the investment adviser industry continues to experience record growth. The number of SEC-registered advisers, the number of clients they served, the assets they managed and the number of people they employed all reached record highs in 2020. Approximately 14,000 SEC-registered advisers have employed over 879,000 non-clerical employees who are managing USD110 trillion in assets.
Individual investor demand for advice is surging. While all client segments have grown over the past three years, growth in both the number and assets of individual clients has been exceptionally strong, with the number of individual investors growing by 38 per cent over the past two years.
Growth has been strongest for the largest advisers. Advisers with over USD100 billion in assets have experienced gains in assets of 14 per cent-plus annually over the past five years, far ahead of smaller advisers.
Compensation structures have become increasingly flexible. Over the past 20 years, advisers have become more likely to offer fixed fees and hourly fees in addition to asset-based fees.
Advisers are on the move. Compared to 2019, adviser offices were more likely to be in southern states and less likely to be in traditional financial centres.
"The data in this year's report confirmed what we've known all along: demand for services provided by advisers continues to increase, even as supply rises. Advisory services are increasingly viewed as an indispensable and ubiquitous necessity for financial well-being for ever-greater portions of the population, the demand for which has been less sensitive to economic cycles than many other services," says John Gebauer, president of National Regulatory Services. "If this pattern continues to hold, the industry will experience continued and robust growth, further demonstrating its crucial role in the lives of investors. It's an exciting time to be an investment adviser."