Strong market drives adviser assets sharply higher

Although the total number of investment advisers registered with the Securities and Exchange Commission increased slightly over the past year, the amount of assets they manage jumped substantially. The number of SEC-registered advisers grew to 10,533, from 10,511, between July 2012 and April 13 of this year, according to a new report from an adviser trade association. Over the same time, their assets under management zoomed 11% to $54.8 trillion, from $49.4 trillion, according to a study, Evolution/Revolution, based on SEC filing information. The report was sponsored by the Investment Adviser Association and National Regulatory Services. Strong gains — about 13.4% — in the S&P 500 in 2012 helped put more advisers in the AUM category of $100 billion or more than has ever been recorded in the study over the past 13 years. “Overall, it shows this is a very healthy profession,” said David Tittsworth, the IAA's executive director. “It looks like the profession overall is gaining both assets and clients.” The largest advisers continue to control the lion's share of assets, according to the report. The 99 advisers who manage $100 billion or more in assets account for more than half of the total assets under management in the sector. Advisers with less than $1 billion in assets under management make up 73% of SEC-registered advisers. While the industry grows, the composition of the advisers the SEC oversees is changing. Over the past year, more than 2,000 advisers with assets under $100 million switched to state regulation as part of a mandate of the Dodd-Frank financial reform law. At the same time, the agency took on more than 1,500 private-fund advisers. More than one third of SEC-registered advisers reported managing at least one private fund. As the assets they manage expand, advisory firms themselves remain small-scale. More than half of them — 57.8% — reported having 10 or fewer nonclerical employees, while 88.3% have fewer than 50. Overall, the firms employ more than 700,000 people, according to the report. Investment advisory firms strengthen the small-business sector of the economy, Mr. Tittsworth said. “Most investment advisers are small businesses,” he said. “You're still seeing a fair amount of creation of firms and a continuation of [the employment] trend.”