Regulatory assets held by advisors registered with the Securities and Exchange Commission increased by $6.9 trillion (12.6%) in 2014 to $61.7 trillion from the $54.8 trillion held last year, with the top 1% of advisors managing more than 52% of that total, according to the Investment Adviser Association and National Regulatory Services’ Evolution/Revolution report, released Tuesday.
In their 14th annual report based on Form ADV, Part 1 data filed by all SEC-registered advisors as of April 7, IAA and NRS also found that the total number of SEC-registered advisors increased from 10,533 in April 2013 to 10,895 in April 2014.
While these advisors employ more than 700,000 persons and serve almost 28 million clients, the majority of advisory firms are small businesses. In 2014, more than half of all advisors (6,216 or 57.1%) reported having 10 or fewer full-time and part-time nonclerical employees, and 9,581 (87.9%) reported having 50 or fewer such employees. Similarly, 5,768 (52.9%) firms reported having five or fewer employees engaged specifically in investment advisory functions (including research) and 7,980 (73.2%) reported having 10 or fewer.
While small advisors “constitute the largest market segment,” noted John Gebauer, NRS’ managing director, in a statement, the largest advisory firms manage the bulk of the assets.
In 2014, the 112 largest advisors (those reporting $100 billion or more in RAUM), collectively accounted for more than half (52.6%) of all reported RAUM — a 1.7% net increase from last year — while only accounting for 1% of the total number of SEC-registered advisors, the report states.
On the other hand, advisors with less than $1 billion RAUM — which account for 71.5% of all advisors — collectively managed only 3.5% of all reported RAUM.
The report also notes that the 9,380 registered investment advisors (86.1%) reported no disciplinary history at all, which is comparable to last year, when 9,063 advisors (86.0%) reported no disciplinary history.