Total assets managed by investment advisors shrank for the first time since 2003, but despite a nearly 20% drop in assets, the number of SEC-registered investment advisors increased by 2% to 11,257, according to the ninth annual Evolution/Revolution report, which was released on October 2 and is jointly conducted by The Investment Adviser Association (IAA) and National Regulatory Services (NRS). Total assets under management (AUM) reported by all firms “dropped precipitously to $34 trillion after reaching an all-time high of $42.3 trillion the previous year,” the report found.
The report is based on fiscal year-end data that RIAs must file electronically with the Securities and Exchange Commission (SEC). The report notes that as reported in previous Evolution/Revolution reports, assets under management are highly concentrated with a small number of very large firms. “Four percent of SEC-registered investment advisors manage more than 80% of the total assets. Small businesses (those that employ fewer than 50 employees) make up the bulk of the SEC-registered investment advisory universe at 90%,” the report states.
David Tittsworth, executive director of the IAA, noted in releasing the report that “the vast majority of advisory firms experienced significant declines in assets under management as a result of the financial crisis of 2008.” However, he continued, “the investment advisory profession continues to be resilient and we expect that assets will increase as the markets rebound. As the current regulatory reform debate moves forward, we believe it is critical for policy makers to be mindful of the broad diversity of investment advisory firms, including the predominance of small businesses.”