For most RIAs, '09 proved dismal

Only five of the 50 biggest firms saw jump in discretionary assets last year

Mar 7, 2010 @ 12:01 am

By Hilary Johnson

Stiff competition in the wealth management industry, combined with the effects of a volatile market, thwarted many of the nation's biggest RIA firms in their efforts to gather assets in 2009.

Of the 50 biggest registered investment advisory firms, only five had more discretionary assets on their books at the end of the year than they did at its outset, according to exclusive research conducted by RIA Database for InvestmentNews. That said, combined discretionary assets for the 50 biggest firms totaled $115.7 billion Dec. 31, up 14% from a year earlier.

Compared with the previous quarter, discretionary assets edged up 2% from $113.3 billion, the data showed.

Meanwhile, total assets, which included assets the RIAs didn't manage directly, in-creased 15% over the year to $132.7 billion.

The data were extracted from the ADV forms that investment advisers are required to update annually with the Securities and Exchange Commission. Although not all firms update their ADV forms on a calendar year basis, the analysis offers a glimpse into the difficult business environment that many advisory firms face.

Indeed, many RIAs are scrambling to gather assets in an environment where little new wealth is being created through such events as initial public offerings or private-equity deals.

“The game we've had to play for the last three years or so has been has been the hardest game of all,” said Peter “Tony” Guernsey Jr., chief client officer of wealth advisory services at Wilmington Trust Corp. “In order to grow assets, you have to take it away from someone else. That's a hard game to play.”

GenSpring Family Offices LLC ranked No. 1, with $11.4 billion in discretionary assets, followed by Veritable LP, which ranked No. 2 with $7.6 billion in assets, and Silvercrest Asset Management Group LLC, which came in at No. 3 with $5.9 billion.

The three firms accounted for about 22%, or $25 billion, of the discretionary assets held by the 50 largest firms overall.

Of the three biggest firms, only Silvercrest posted a jump in assets. The firm's discretionary assets rose 6% in 2009 to $5.9 billion, from $5.6 billion at the end of 2008.

Gathering assets is as tough as it's ever been, said G. Moffett Cochran, Silvercrest's chief executive.

“For years, clients didn't shop around that much. Now, if you're lucky, you're on a list of five, and it's not uncommon to be on a list of 10. The clients are much more sophisticated, and they're much more careful,” Mr. Cochran said.

The key to success is providing clients with a high level of investment performance, coupled with a very high level of service, he said. “Very few firms do both, so if you are, you've distinguished yourself in a very crowded field.”

SCS Capital Management LLC, which ranked No. 4 on the list, also saw asset growth in 2009, with discretionary assets climbing 21% to $5.7 billion, from $4.7 billion.

The jump in assets was the result of the firm's efforts to add clients, according to SCS Capital chief executive Peter Mattoon. At the end of 2009, SCS had 104 discretionary accounts, up from 82 a year earlier, according to the data.

Another firm in the top 50 — Luminous Capital LLC, which ranked No. 17, also saw a double-digit increase in assets. Luminous ended the year with $2.2 billion in assets, a 42% jump from $1.5 billion at the beginning of the year. The firm, which was formed in May 2008 by a group of brokers from Merrill Lynch & Co. Inc., also increased its number of discretionary accounts by 20% to 1,345.

For Luminous, the bulk of the increase in assets was due to new clients, who have at least $10 million in investible assets. Part of the firm's growth can also be attributed $215 million in investment gains in 2009, said partner Kim Ip.

One particularly successful asset class for Luminous has been distressed debt, she noted, given the generous supply of bank debt and bargain-basement prices.

“Our best-performing assets have been in the distressed-credit category, both distressed mortgages and distressed corporate credit,” Ms. Ip said. “We kept our allocation to equities very low, and we chose to put our risk budget in distressed credit. And it's where we continue to allocate capital today.”

In the specialized field of distressed debt, it's critical to find managers who fully understand the value behind the assets, Ms. Ip stressed.

“It all comes down to the managers,” she said. “The investor is naming their price, and we like that dynamic. It provides an outsized opportunity.”

E-mail Hilary Johnson at


What do you think?

View comments

Upcoming event

Oct 22


San Francisco Women Adviser Summit

The InvestmentNews Women Adviser Summit, a one-day workshop now held in six cities due to popular demand, is uniquely designed for the sophisticated female adviser who wants to take her personal and professional self to the next level.... Learn more

Most watched


Finding innovation in your firm

Adam Holt of AssetMap explains how advisers understand they need to grow, but great innovation may be lurking right under your nose.


Finding your edge from Tony Robbins

Guru Tony Robbins has helped a lot of people, but armed with his psychology Financial Advisor Josh Nelson has helped his practice soar.

Latest news & opinion

The growth of factor-based investing

Advisers are making decisions about clients' portfolios by using the same characteristics that govern factor-based ETFs.

Finra makes its list to target hundreds of rogue individuals

The regulator sees patterns in the behavior and disclosures of high-risk brokers.

LTC insurer offering co-pays to blunt soaring premium increases

John Hancock policyholders would get a discount on their premium in return for agreeing to pay a bigger portion of their claims in the future.

Goldman Sachs acquires United Capital

After a payday of $75 million or more, CEO Joe Duran plans to join Goldman in a senior position.

Private equity loves IBDs, but will that last?

Three big acquisitions in less than a year signals renewed life in the formerly beleaguered industry.


Hi! Glad you're here and we hope you like all the great work we do here at InvestmentNews. But what we do is expensive and is funded in part by our sponsors. So won't you show our sponsors a little love by whitelisting It'll help us continue to serve you.

Yes, show me how to whitelist

Ad blocker detected. Please whitelist us or give premium a try.


Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print