Page 10 - Investment Advisor October 2022
P. 10


                                                     By Janet Levaux

                 What a Growth Track!

                           e’re pleased to present the cover story for this   “Thus, organizations have been looking at ways to serve
                           month’s issue, which focuses on RIA trends —   more clients with the human resources they have. And many
                 W from the wave of dealmaking to other ways RIAs   are finding that the best solution is to transition clients from
                 are expanding their practices via organic-growth strategies.   busy primary advisors to advisors who have excess capac-
                 The latest tally of Securities and Exchange Commission-  ity. Firms often have a hard time moving forward with client
                 registered investment advisory firms jumped about 7% last   transfers, though,” Herbers said. Her latest column offers sev-
                 year — or by 926 firms from 2020 — to 14,806 firms, accord-  eral helpful guidelines on how to do so successfully.
                 ing to the Investment Adviser Association and National   In her latest The Playing Field column, Washington Bureau
                 Regulatory Services.                                                           Chief Melanie Waddell
                   While nearly 88% of       The latest tally of SEC-registered                 SEC looks at likely rule-
                 the SEC-registered advi-                                                       makings  this  year  by the
                 sors had under $5 billion  investment advisory firms jumped about              SEC that aim to rein in
                 in assets under manage-    7% last year — or by 926 firms from                 12b-1 fees as well as cus-
                 ment, 92.5% of industry                                                        tody rule infractions. “The
                 assets were managed by    2020 — to 14,806 firms, according to                 custody rule process is
                 firms with AUM over $5   the Investment Adviser Association and                well underway,” Barr said
                 billion, according to the                                                      recently in an interview
                 report. Asset growth has      National Regulatory Services.                    with Waddell. “It’s not
                 been strongest for advi-                                                       unrealistic” that the agen-
                 sors with over $100 billion in AUM. In each of the past eight   cy could put forth a rule in late October or November.”
                 years, the number of SEC-registered advisors has increased,   “Fund fees have been on the SEC’s regulatory agenda for quite
                 while the number of brokerage firms has declined.   some time now,” Amy Lynch, founder and principal of FrontLine
                   “The results of the [IAA and NRS’] 2022 Snapshot confirm   Compliance, noted in a separate interview. “As you know, Rule
                 [that] investors recognize the value of fiduciary advice in   12b-1 fees have been dealt with rather harshly via the numerous
                 helping them meet their financial goals, whether planning for   enforcement actions against funds. The industry has certainly
                 retirement, saving for homeownership or funding an educa-  received the message and the use of 12b-1 fees is declining.”
                 tion.  With the vast majority of firms employing 50 or fewer   At the same time, though, “other fees such as revenue
                 people, it’s clear small businesses serving individual investors   sharing are increasing. The key for funds is to provide clear
                 are the backbone of the investment adviser community,” said   and consistent disclosure to shareholders regarding the fees
                 Karen Barr, IAA CEO and president.                 charged. I suspect any rulemaking that comes out to focus on
                   Also in this month’s issue, industry consultant and The Fast   descriptive disclosures,” Lynch explained.
                 Track columnist Angie Herbers looks at the shortage of finan-
                 cial advisors. “Asked to name their top business challenge, firm
                 after firm will point to the difficulty of recruiting, training and
                 retaining talent. Amid the human resources crunch, advisory
                 firms continue to grow. To accommodate that growth, they
                 need more advisors — who are in short supply,” she explained.               GROUP EDITOR-IN-CHIEF

              8 INVESTMENT ADVISOR OCTOBER 2022 |
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