More RIAs, and Assets

Despite the continuing poor performance of the stock market over the past year, the number of registered investment advisory firms has grown, and so have their assets under management–to the tune of $1.7 trillion, according to a newly released report by the Investment Counsel Association of America (ICAA) and National Regulatory Services (NRS).

This is the second year that the ICAA and NRS have performed a survey based on data culled from electronic filings of Form ADV, Part 1. The Securities and Exchange Commission began requiring last year that those advisory firms with $25 million or more in assets under management register with the SEC by filing Form ADV, Part 1, via the Investment Adviser Registration Depository (IARD).

This year’s survey revealed that as of May 15, 7,581 SEC-registered advisors had filed Form ADV, a substantial increase from the 6,649 firms that filed last year. David Tittsworth, executive director of the Investment Counsel Association of America, says the two firms chose May to compile the Form ADV data because advisors are required to submit Form ADV, Part 1, within 120 days of the end of their fiscal year. “But the vast majority of advisors have calendar years, so at the end of April we figured we’d capture the newest information from most advisors.”

One likely reason there was a jump in the number of advisory firms this year, Tittsworth explains, is that firms that should have filed last year didn’t. The ICAA and NRS reported last year that 673 firms may have set up IARD accounts without filing Form ADV. Nonetheless, Tittsworth says growth in SEC-registered advisors is strong, and more advisory firms are likely reaching the $25 million-under-assets threshold. And new advisors are also entering the market. “One of the things that continues to amaze me is that there are very low barriers to entry into this profession, and there are people setting up shops all the time.”