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Industry report card

by Karen Barr

Any way you measure it, the investment adviser profession is strong, growing and on a path for continued expansion in the years ahead.

Data reported earlier this year by federally registered advisers to the SEC show impressive growth for advisers across all major metrics, including number of firms, number of clients and assets under management, underscoring that our industry is a vital asset to investors, to our economy and to the capital markets.

The detailed portrait our research paints of the investment advisory industry demonstrates the diversity and breadth of this community.

We collected and analyzed data filed on Form ADV, Part 1 — the regulatory form that all investment advisers must file at least annually — as of April 8, 2015, for 2015 Evolution Revolution, the 15th edition of an annual joint study by the Investment Adviser Association and National Regulatory Services. It is the most comprehensive profile of the advisory industry available. Our findings this year were particularly compelling:

·  The industry saw an increase in the number of SEC-registered advisers in every tier of regulatory assets under management (RAUM), from the smallest to the largest. 2015 Evolution Revolutioncontains data on 11,473 advisers, a net increase of 578 advisers (or 5.3 percent) since our 2014 report. That is the largest increase in four years. Just over half of the net increase came in the $100 million to $1 billion RAUM tier, with 295 additional firms in that category. A number of factors contribute to these positive growth trends in the number of advisers across RAUM categories, including the strong economic and market performance during the measured time period that led to a growth in assets, as well as an increase in individual saving for retirement.

·  Equally dramatic evidence of the growing strength of the investment adviser profession is the number of new hires at adviser firms. Since our 2014 report, federally registered advisers reported adding more than 31,000 jobs, to a total of more than 750,000 non-clerical employees. That is a 4.3 percent increase.

·  The number of clients the industry serves jumped by nearly 2 million (or 6.8 percent) to nearly 30 million.

·  The industry now manages nearly $67 trillion in regulated assets under management (RAUM), an impressive increase of 8.1 percent over 2014. Since 2012, aggregate RAUM has jumped by an equally impressive 34.8 percent.

When we look at how that RAUM is distributed among nearly 11,500 advisers, we get a clear picture of the composition of the advisory industry. A small number of very large advisers (128 firms, or just 1.1 percent of SEC-registered advisers) collectively managed more than half of total RAUM, 54.9 percent. Clearly, the vast majority of investment advisers are small businesses.

 

Karen Barr is president and CEO of the Investment Adviser Association.

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