There were more RIAs in 2023 than ever before, but what does a typical firm look like?

The number of RIAs reached a new record high in 2023, with 15,396 registered with the SEC, up from 15,114 in 2022 which was the previous all-time high.  It was the 12^th consecutive year of growth.

A new report from the Investment Adviser Association provides a snapshot of advisory firms in a year when total industry AUM rebounded almost 13% to match the record high of $128.4 trillion that was last seen in 2021.

Asset management client numbers also grew year-over-year at a 4.4% pace to reach 56.7 million, while overall clients rose by 3.5%. Individual asset management clients have increased over the past six years by almost 13% per year and in assets managed for those clients by 15% per year.

The report also identified 5,390 exempt reporting advisers filing Form ADV with the SEC and 3,940 filing with state authorities, managed over $6 trillion in private fund gross assets.

Across the industry, most RIAs (almost 93%) had fewer than 100 employees and around 88% managed less than $5 billion in assets with 69% managing less than $1 billion. These lower-AUM advisors accounted for almost all of the new SEC registrations in 2023 and new registrants accounted for almost 10% of these sub-$1 billion firms.

For RIAs focused on individual clients, most are small with an average nine employees, two offices, and $365 million AUM. Nearly 20% of SEC registered advisors are affiliated with another SEC registered advisor.

For state-registered advisors, the average number of employees is two with AUM of $26 million, they have an estimated 285,000 financial planning clients and over 218,000 clients that use services other than asset management.

“The 2024 Snapshot highlights just how significant of a segment SEC private fund advisers, and closely related exempt reporting advisers, represent in today’s market, with a whopping combined $29T in regulatory assets under management. With such influential market impact, it is understandable that the SEC has perceived a regulatory gap and targeted these firms with rulemaking in the last few years,” said COMPLY Chief Regulatory Officer John Gebauer. “Given the recent ruling that vacated the Private Funds Reforms Rule, it will be interesting to see how the SEC responds. It is clear, though, that private funds have broad appeal in today’s market, and they will likely continue to grow faster than the industry average.”

The Investment Adviser Industry Snapshot 2024 was conducted by the IAA in collaboration with Comply.