Assets under management at registered investment adviser firms grew 5.8% to $70.7 trillion, and the number of firms increased by 2.7% to 12,172, according to the latest annual report from the Investment Adviser Association and NRS based on ADV forms as of April 1.
After gains of 3.4% in 2014, 5.3% in 2015 and 3.3% last year, adviser growth is slowing, the report found. AUM growth, in contrast, is up sharply from last year's 0.2% gain, but lower than AUM growth of 8.1% in 2015, 12.6% in 2014 and 10.9% in 2013.
The report found that the industry remains marked by a predominance of small businesses — 6,911 advisory firms (56.8% of the total) reported that they employ 10 or fewer non-clerical employees and 10,641 (87.4%) reported employing 50 or fewer individuals. The industry also continues to experience strong job growth in investment advisory positions, with an increase of 13,631 employees.
Individuals comprise the largest category of advisory clients, with pension-plan clients coming in second, the report's authors said in a release. Almost 61% of advisers serve either high-net-worth individuals, non-high-net-worth individuals or both, while 45.6% reported at least one client being a private-sector pension or profit-sharing plan. NRS estimated that these institutional clients represent $8.9 trillion and $6.2 trillion, respectively, of the total $70.7 trillion in assets under management.
The number of advisers who specialize in private funds and registered private fund advisers is growing. In 2017, 4,574 advisers reported advising 34,409 private funds with total gross asset value of $11.5 trillion, up from 4,448 advisers, 32,445 funds and $10.5 trillion in asset value in 2016. While the percentage of hedge funds and private-equity funds was equal last year, there is now a divergence, with private-equity funds making gains while hedge fund growth stagnated, the report said.